448915

2012
JOU0010.1177/1464884912448915ManningJournalism

Article

Journalism

Financial journalism, news

1­–17
© The Author(s) 2012
Reprints and permission: sagepub.
sources and the banking crisis co.uk/journalsPermissions.nav
DOI: 10.1177/1464884912448915
jou.sagepub.com

Paul Manning
University of Winchester, UK

Abstract
One of the most notable features of the recent and continuing global banking crisis has
been the failure of financial journalism, together with the global news agencies, to alert
us to the signs of imminent catastrophe, thus confounding over-simplistic models of
journalism as an efficient system of antennae monitoring the external environment. With
a handful of honourable exceptions, most financial journalists and most international
news agencies simply failed to report much of the emerging evidence of the growing
possibility of collapse. Various explanations have been proposed for this failure including
the complexities of the evidence, the manipulative power of financial public relations,
and the difficulties of undertaking investigative journalism when newsrooms cut staff.
This article, drawing on a theoretical framework for analysing exchange relationships
between journalists and their sources first developed in Manning (2001), argues that a
more fully developed explanation needs to explore the ways in which a distribution of
political and symbolic power shaped relationships between financial correspondents,
news agencies and the key information flows operating within global financial systems.

Keywords
banking crisis, exchange relationships, financial journalism, information flows, news
sources and power

Introduction
The cost of the collapse of the global financial system runs into trillions of dollars,
perhaps over $10.8 trillion or around 20 per cent of world economic output, equivalent
to £10,000 per person in the developed world, according to some estimates (Schiffres,

Corresponding author:
Paul Manning, School of Media and Film, Faculty of Arts, University of Winchester, Sparkford Road, West
Hill, Hants SO22 5NR, UK.
Email: paul.manning@winchester.ac.uk

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2 Journalism

2009). Figures produced by the UK House of Commons Treasury Select Committee

show that in the two years between April 2007 and April 2009, £178.8 billion had
disappeared from the market capitalisation of the UK high street banks (2009: 9). Of the
nine main high street banks in 2007 only five remained, supported with an injection of
£37 billion from the UK tax payer (Tett, 2009: 286). The consequences for the lives of
ordinary people in terms of job security, pensions, schooling, health care, public transport
infrastructure, and so on, are profound.
It was the fond hope of mass communication theory in the middle of the last century
that news media might act as the antennae of society, alerting the polity and community
to potential threats or significant change in the external environment (Lasswell, 1960).
The collapse of financial capitalism must count as a significant change in the external
environment and yet there has been much soul-searching about the failure of the financial
media to spot the disaster coming before it was almost upon us. This article draws upon
interviews with sources within the City of London and with financial journalists, together
with other materials including journalists’ blogs, to explore the reasons for the absence
of a critical, holistic financial journalism, capable of sounding a louder alarm as the
antecedents of the crisis began to emerge. The preface to Gillian Tett’s account of the
global financial meltdown provides a clue as to what a critical and holistic financial
journalism might look like. According to Tett, writing about the years before the 2008
crisis, news coverage of finance and economics was often fragmented; particular parts of
the financial world received quite a lot of attention (corporate finance, national economic
trends, mergers and acquisitions, etc.) but even specialist newspapers, such as the
Financial Times, awarded comparatively little attention to debt and derivatives markets
and much of the mainstream news entirely ignored these sectors (Tett, 2009: xi). A
critical and holistic financial journalism might seek to work against the fragmentation of
financial reporting that Tett describes and to make connections between the micro and
macro; between the microscopic world of particular leveraged positions and derivative
trades on the one hand, and, on the other, the implications of those for the global economic
patterns that can decide the life-chances and opportunities of ordinary people located in
particular economic situations. This article seeks to offer some preliminary insights as to
the reasons why financial journalism, with some limited but honourable exceptions, did
not make these connections until the worst financial crisis since the 1930s had already
reached its most destructive phase.
Interviews were conducted between September and December 2009 with five current
or former UK financial and economics journalists with wide experience at diverse news
organisations. In addition, use has been made of material from the debate conducted at
City University in December 2009, and also of journalists’ own personal blogs. In total,
the views of 12 current or former UK-based financial journalists or economics
correspondents have been gathered. In addition, five interviews were conducted with
staff working for financial institutions: two senior traders on desks at a large global bank
based in Canary Wharf, an experienced broker at a smaller international bank based in
London, an executive at a small London hedge fund, and a former financial journalist
now working within financial services. In addition, material has been drawn from an
interview with Paul Moore, former Head of Regulatory Risk at HBOS, broadcast on
BBC Radio Four.

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Manning 3

Theoretical context
In recent years there has been some common ground established amongst diverse
researchers interested in the politics of information flows. While the powerful, those
organisations commanding significant economic and political resources, enjoy
advantages in the struggle to exercise control over the flow of information, a large body
of research suggests that there still exist possibilities for the politically marginal providing
they are ‘media savvy’, and recognise the ways in which other kinds of symbolic
resources and media strategies can be deployed (Anderson, 1991; Davis, 2000a; Manning,
1998; Miller, 1994; Schlesinger and Tumber,1994). Davis terms this common ground
‘radical pluralism’ (2000b). But one problem with this kind of approach is that it tends to
place most emphasis on the proactivity of the organisations struggling to deploy resources
to secure media victories. This is not wrong and is, indeed, a very important dimension
of the study of contested mediation but it does not help us with another equally important
dimension: the expression of power through the non-emergence of information flows. In
considering the failure of financial journalism to spot the story of the collapse of global
financial capitalism, it is this dimension that requires discussion. The idea that the
powerful could somehow benefit from silences or inactivity, as well as mediated
proactivity, certainly goes back a long way (Crenson, 1971; Lukes, 1974). Significantly,
this tradition stresses the lack of intention as well as the deliberate will to suppress
information flows: sometimes powerful organisations do not need to do anything for
inconvenient information not to emerge in public discourse. In the case of the non-
reporting of the looming global financial crisis of 2008, a complex combination of forces
operated to encourage a non-reporting of the growing problems.

Financial journalists and the benefit of hindsight

Since 2008 financial journalists have secured more space and air time for their copy than
ever before; their expertise has never been in such high demand within the news
organisations they work for. As Larry Elliott of The Guardian admitted, ‘we’re having a
ball … we’re no longer the guys with pointy heads sitting in the corner’ (2009). But there
has also been a spate of public criticism directed at financial journalism for the approach
taken to the crisis and some soul-searching on the part of financial journalists themselves.
There have been complaints that in pursuing stories about individual bankers with
enormous bonuses and fabulous lifestyles, the financial press have trivialised the crisis
and neglected the more fundamental underlying issues (Goodhart, 2009). Another
complaint, made amongst others by the director of the Confederation of British Industry,
Richard Lambert (a former financial journalist), has been that media coverage actually
exacerbated the crisis by exaggerating the difficulties of the banks, thus spreading alarm
amongst the public and undermining investor confidence (2008: 9). However, the
sharpest criticism and the one to prompt the most soul-searching on the part of journalists
was that they missed the story in the first place, before the crisis was upon them.
Some limited quantitative content analysis studies have already been undertaken of
financial reporting in the UK and the USA in the years prior to the crises of 2007–8. A
preliminary search of UK newspapers using Lexis-Nexus undertaken by Paul Lashmar

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4 Journalism

did not reveal ‘any journalist providing a serious warning about the dangers of CDOs
[collaterised debt obligations] before 2007’ (2008: 5). With regard to the USA, Starkman
undertook a survey of over 700 news reports and articles published between 2000 and
2007 and found that there were very few critical articles dealing with the potential
dangers associated with banking, leverage or hedge funds (2009). Indeed, there were
fewer critical articles as the decade wore on. Of course, much hangs on what is meant by
critical. Starkman did find articles that addressed problems with specific financial
services and specific companies but nothing that offered a more critical and holistic
assessment based on establishing the kinds of connections between micro and macro
suggested in the introduction. In the UK, several journalists now claim to have identified
the ‘warning signs’ in pieces written earlier in the decade (Wilby, 2008), though these
claims have sometimes been disputed. But it is possible to point to particular pieces
produced by Gillian Tett and her colleagues at the Financial Times (Tett et al., 2006a,
2006b), Alex Brummer, City Editor at the Daily Mail, Larry Elliott and Dan Atkinson at
The Guardian, for example, that raised questions about aspects of the dependency upon
leverage and corporate debt. But even Tett concludes that ‘the only thing that is more
remarkable than this deadly state of affairs [the global financial crisis] was that it went
so unnoticed for so long’ (2009: 299).
Journalists’ own explanations for the crisis have ranged from blaming the relative
inexperience of a younger generation of correspondents, too youthful to remember
earlier financial crises, the power of psychological denial, through to the sheer
impenetrable complexity of hedge funds (Hewett, 2008; Islam, 2009; Robinson, 2008).

The production of financial news: Was the information

‘out there’?
These explanations offer partial insights that are helpful but a more comprehensive
explanation needs to focus on the complexity of forces that operate in the production of
financial news, including the politics of news sources, the exchange relationships
between financial sources within the City and the financial journalists producing
wholesale and retail news, and it needs to place these in the context of the distribution of
symbolic, political and economic resources. However, it also needs to recognise that the
inactivity as well as the proactivity of particular powerful institutions is important.
Information was available in the public domain in the years between 2002 and 2007 that
might have been used to develop a holistic and critical assessment of risks to the global
financial system and there were some discussions within City institutions that might
have alerted journalists.
The collapse of Enron in December 2001 and the subsequent action taken by the US
Securities Exchange Commission in fining two of the leading global banks, JP Morgan
Chase and Citigroup, for their part in the scandal, could be regarded as the first important
evidence of significant problems in the global banking system (Mason, 2009b: 72). We
also know, for example, that the UK’s Financial Services Authority investigated the
regime of credit risk management at HBOS in 2003 and raised concerns about the bank’s
exposure in the corporate sector and the culture driving the Halifax sales division. As a
consequence, Paul Moore was promoted within HBOS to become Head of Regulatory

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Manning 5

Risk, a position he was subsequently sacked from the following year, after confirming to
the board the grave risks he believed the bank was running (House of Commons Treasury
Select Committee, 2009; Moore, 2009). When Moore was sacked from HBOS, he claims
he received ‘countless emails of support from colleagues’ (Moore, 2009), suggesting that
many other staff within the City shared his fears. Wall Street had already instigated a
review of the complexity of finance in 2005 (Tett, 2009: 265) but it is clear that some of
the leading US banks were also having internal discussions about the huge potential
dangers of over-exposure in sub-prime mortgage markets as early as 2006, with, for
example, Jamie Dimon, President of JP Morgan Chase, warning that, ‘we need to sell a
lot of our positions … This stuff could go up in smoke’ (quoted in Tett, 2009: 168). In the
City of London similar conversations were occurring at the same time. A senior broker
with experience at two ‘bulge bracket’ (large diversified) banks recalled:

In November 2006 X [name omitted] wrote a note on bank shares advising everyone to sell but
this wasn’t picked up. I’m a media cynic and I think it was in everyone’s interest to keep the
party going. Politicians, the media, … the City didn’t want to hear this kind of evidence …
think of all those apartment blocks being built in that New Labour eastern corridor from Hull
to Essex … it wasn’t in the interests of the property developers, the politicians or the banks to
be party poopers … (Interview B)

Gillian Tett had first been alerted to the potential dangers of credit derivatives in a
snatched conversation with a banker in 2004 (Tett, 2009: xiii). In 2005 and 2006, she and
colleagues on the Financial Times had begun to report some of the anxieties circulating
in the City (for example, Tett and Hughes, 2006). Two hedge funds operated by Bear
Stearns had collapsed in June 2007 which might have sounded wider alarm bells not only
about the longer term stability of Bear Stearns but also with regard to the overall stability
of the derivatives market (Mason, 2009b: 8). The cost of insuring against Bear Stearns
defaulting (credit default swaps) steadily rose in the next 12 months, with the insurance
price of $10 million Bear bonds rising from $100,000 in March 2007 to over $600,000
in March 2008 when Bear Stearns actually collapsed (Tett, 2009: 255). Rumours circu-
lated about the strength of HBOS, one of the nine major UK high street banks, but these
were not substantiated or reported by financial journalists (Islam, 2009). In August 2007
stress signals could be detected in the credit markets which precipitated the difficulties at
Northern Rock, in turn forcing the bank to approach the Bank of England for emergency
support. According to Lashmar (2008) and Starkman (2009), it is really only at this point
that financial journalism begins to explore the emerging dangers but even here, on the
admission of financial journalists themselves, few began to develop a comprehensive or
holistic approach that might point to the broader dangers.
In retrospect, many journalists do concede that there was a collective failure. Evan
Davis (BBC Radio 4 Today Programme) wondered aloud whether journalists should
have done more (quoted in Lashmar, 2008: 9); Robert Peston (BBC) and Jeff Randall
(Sky) agreed in their evidence to the House of Commons Treasury Select Committee
(2009) that journalists should have questioned the prevailing mood of economic optimism.
Hugh Pym (BBC economics editor) conceded that journalists shared responsibility with
others:

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6 Journalism

… we should have asked more questions, I’m happy to acknowledge that but so too should
MPs, consumers, people who borrowed large sums of money … as well as large market players.
(Pym, 2009)

A senior national newspaper journalist and former financial correspondent rejected the sug-
gestion that even Gillian Tett really grasped what was going on before the summer of 2007:

I’ve known Gillian a long time and she’s a good journalist and colleague but she did not spot
the global crisis. That was not foreseen by anyone. What she did was to point out the risks in
derivatives. There were plenty of people saying there was too much leverage … including
bankers. (Interview E)

However, Faisal Islam (Channel 4 News) also believes that financial journalists might
have developed stronger lines of enquiry and, significantly, he identifies a failure to
relate macro perspectives to information concerning micro economic behaviour.

This is the biggest failure in public policy in my life time and a few older people’s lifetimes too,
so one could argue retrospectively that there could have been a more robust holding to account
of … the political economy behind the bubble, the Byzantine structures that built up in the
banking system … I mean the truth is that many people did spot it in 2003, that lending in this
country for example was out of hand and many people cried wolf at that point … the irony is
that many of us knew about the big picture, that China and the creditor states were foisting a
wall of debt upon the debtor nations and we knew about the smaller picture that many people
were getting 125% loans and mortgages of 7, 8, 9 times income … I think very few people and
possibly nobody worked out the mechanisms that connected those two stories and worked out
the whole supply chain of credit. If people were aware that the supply chain of credit was
dependent upon such bizarre, incorrigible and possibly fraudulent [practices] then maybe
people would have been a bit more sensible … I don’t know … but I think looking back on it I
would have loved to have put that jig saw puzzle together … (Islam, 2009)

In other words, few mainstream news reports or commentaries even in the period between
the collapse of Northern Rock in 2007 and the ultimate crisis of September 2008 made
connections between the emerging symptoms of crisis at the micro level (growing
consumer debt, banks only sustaining profits through highly aggressive sales cultures,
etc.) and the macro structures of expanding national debt, and the more frequent use of
off balance sheet accounting.

Explaining the non-reporting of the antecedents of

collapse
If the information was, in a sense ‘out there’; if financial analysts, brokers, and traders
were discussing anxieties about the long-term viability of the ‘new Wall Street system’;
if dissenting voices had already sounded within certain high profile banks, and critical
pieces of information were already in public circulation, how can the absence of a
holistic, critical journalism be explained? The answer lies partly in the nature of the
exchange relationships that exist between financial sources and financial journalists but

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Manning 7

these have to be placed in the context of the pressures operating on the production of
financial news, and the power structures within which they are circumscribed.
Beginning within the news room, it is clear that the reasons frequently put forward by
journalists do contribute part of the explanation: mainstream news values which guide
story selection make it difficult for financial journalists to persuade their news
organisations, including news agencies, to select stories which involve high levels of
complexity and appear to lack a ‘personality’ around which to hang information. While
specialist news outlets, such as the Financial Times, operate with distinct news values on
the assumption that their target readership is more inclined to absorb detailed financial
data, many journalists approach financial stories with mainstream selection criteria
(Doyle, 2006: 436). To begin to seriously engage with the available evidence in the
period between 2000 and 2007, financial journalists would have to find ways of making
the highly complex detail of company accounts, derivatives, and asset-backed securities
newsworthy in the immediate sense of mainstream news values, and, as Gillian Tett
admits, even the Financial Times found collaterised debt obligations dull (2009: xi).
But the task of making financial data newsworthy is a daily challenge for financial
journalists. What had changed in recent times, following neoliberal deregulation in the
main global financial centres, was the growing complexity of the data. Banks were no
longer simply banks, a point signalled when the Bank of England abandoned the term
‘bank’ in favour of ‘CFI’ or Complex Financial Institution. And the assumptions that
drove the banks and hedge funds to move deeper and deeper into CDOs, hinged on sets
of mathematical formulae bewildering to many economists and CFI directors, let alone
financial journalists. As one financial analyst working for a large global bank said:

Financial correspondents face several difficulties, (a) they often don’t understand the technical
details – especially risk calculations, hedges, etc., … and (b) they often don’t have time to get
a grip on the underlying patterns … whole chunks of editorial are simply lifted out of our notes
[reports] without much original analysis. (Interview A)

Financial correspondents work within the familiar organisational hierarchies that struc-
ture all news production. Often their news editors are not financial specialists and this
means they can have difficulties in persuading their editors that they have a story. As
Faisal Islam (Channel 4 News) recalls:

It is quite an important issue, though because before the absolute cataclysm in about August 2008
the credit markets were totally in convulsion, the credit markets are bigger than the stock markets,
yet it was an issue of editorial choice, our editors, our bosses, couldn’t quite see there was a problem
unless the stock markets were falling, bizarre but actually tells you something about the prioritization
process within the news media … that we had to wait until the stock markets were falling before
our bosses would understand that there was something wrong with the financial system and yet
companies were stopped being lent to, it was a complete blood bath … (Islam, 2009)

And similarly within papers such as The Guardian,

… even on the Guardian … on the day of the real melt down, when Lehman went bust, on the
Sunday, and it all started to kick off, we knew something bad was happening – the financial and

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8 Journalism

economic staff – and we couldn’t get the paper to put it on the front page because Barclays had
pulled out of a bid for Lehmans so it was actually thought that it was not a big story and if you
look at the Guardian, it’s on about page twenty-eight, and of course, for about the next six
weeks it was on the front page every day … (Elliott, 2009)

So financial journalists may face a challenge in explaining the complexity of financial

stories not only to news audiences but to news editors too. Several journalists, and indeed
financial analysts, interviewed for this article identified a certain preoccupation with
celebrity and personality, at the expense of ‘hard news’, even within economic and finan-
cial reporting. While the now disgraced CEOs, such as Andy Hornby (HBOS) and Sir
Fred Goodwin (RBS), were being constructed in the financial news media as ‘celebrity
bankers’, less attention was being directed to the underlying systemic roots of the crisis.

City sources, financial journalists and information flows

However, a focus on news values and editorial decision-making will only take the
explanation so far. At a deeper level, the analysis needs to consider the ways in which
news source politics and the information flows generated around such politics are
embedded in and express relationships of dominance and power. As Doyle describes,
much financial reporting starts in the way reporting on any other beat is initiated.
Journalists in their search for the first story of the day will sift through company reports,
news diary events, press releases if they are desperate, and the other routine sources of
financial information (2006: 437). But more valuable information will often emerge
from their dealings with contacts and sources within the financial and political institutions
that they have built up over their time as financial reporters. In this, they are as dependent
on key information flows as correspondents working any other beat. There has been a
formalisation of these relationships with the more frequent use by City institutions of
‘professional public relations consultants’, to initiate and structure relationships between
financial analysts and journalists (Davis, 2002; Tambini, 2008), and this has to a degree
displaced the traditional information flows that were secured through informal
relationships between particular financial correspondents and senior figures within the
banks. Richard Lambert complained in his recent speech to the Reform Media Group
that ‘financial PRs have become central figures in the game’, so that, ‘these cosy
relationships [between journalists and sources] are harder to pull off’ … [and that there
are now], ‘armies of investment analysts crawling all over the affairs of large companies
leaving very few exclusive tit bits for that friendly chat between the CEO and the City
Editor’. Access was becoming ‘industrialised’ so that by the end of the 1990s there were
few traditional press conferences, let alone private briefings (Lambert, 2008: 7).
The formalisation of the relationships through the use of public relations consultants
has allowed financial institutions to exert more effective control over information flows
in a formal sense. As the main locus of exchange relationships shifted away from very
senior figures within banks and the main conduits for information became the middle-
ranking financial analysts and brokers working on the desks within the banks, so the kind
of information may have changed. Fewer juicy tit bits to use Lambert’s phrase meant less
contextual intelligence flowing to journalists, at least via these formal public relations

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Manning 9

managed channels. But this is not the complete picture. To begin with, as Lambert notes
in his speech, it was during the informal days of the 1970s that a potentially hugely
damaging banking crisis was entirely concealed from the public in the UK (Lambert,
2008: 2). But secondly, many financial journalists will say that they still rely on their
informal contacts for much of the information. ‘Massage your contacts’ is still the advice
given to young aspiring financial journalists according to the business editor at Sky
(Wilson, 2009), while an experienced correspondent on a Sunday newspaper commented:

Banks will always try to control the relationships between their staff and journalists. Banks will
not allow their staff to talk to us except through their own established channels. That has got
more formalised over the years and most banks and funds will use public relations firms now
or their own press officers … so there is a degree of filtering that goes on either through external
PR firms or internally … but most finance journalists that are any good will use their own
contacts that they have built up over the years. I’m a columnist now but I’ve been a financial
correspondent for twenty years so I’ve built up these contacts and once you have their mobile
phone numbers then you can to an extent bypass the formal systems when you need to check
something or cut through the gloss. (Interview E).

So a book of contacts, or these days a list of mobile phone numbers, remains a measure
of a financial journalist’s effectiveness in the eyes of editors and colleagues. The ability
to circumnavigate the formal channels and establish informal channels for information to
flow from sources that are ‘reliable and informed’ remains a key objective. A frequent
point made in the news source literature is that this can foster a dependency which allo-
cates power in the relationship to sources rather than journalists and certainly there is
evidence to support this analysis in the case of financial reporting (Davis, 2000b, 2002).
But exchange relationships, even if based on a structured dependency, will only be sus-
tained through time if the exchange of information is advantageous to both sides. For
example, the placing of information in particular news outlets of strategic significance,
such as the Financial Times (FT), can be a sufficiently valuable goal for City sources that
FT journalists may enjoy a stronger bargaining position in the terms of the unwritten,
normative framework that governs established relationships between City sources and
journalists (Doyle, 2006: 439).
This begs the question as to why City sources may wish to deal with journalists
outside the formalised domain of professional public relations and how do they
understand the ‘rules’ of the game – the normative framework – that regulates their
relationships with financial correspondents?

We would want to exert some influence over bad stories and push other key information outwards
… on a sales desk you are always looking to promote particular ideas and also to generally build
market reputation. Journalists would want to cross check market rumours. Journalists may want
to write knocking copy but they will know that this may do their mates some harm. They will
mostly have some kind of conscience … although not always. (Interview F)

‘Bad news’ entering the market domain needs to be managed in the eyes of those finan-
cial analysts working on the City desks and the ‘pushing outwards’ of positive informa-
tion can help improve the price of a stock. And, of course, money can also be made from

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‘shorting’ stocks if negative information lowers the price. Markets are mediated environ-
ments, responding more to constructed sensibilities than ‘hard objective’ data, and there
is good evidence to demonstrate the relationship between share prices and media expo-
sure (Davis, 2006; Tetlock, 2009). So relationships with financial media are important
for financial analysts and need to be cultivated.

When I first arrived at [major global bank based at Canary Wharf] in 2004 I was the main
conduit for our desk and journalists such as Neil Hulme who writes the Alphaville column for
the FT. When I joined we were very low profile … When I joined [x bank] in 2004, they were
at the other end of the spectrum. Their PR was very passive, and they would just let stories
[damaging stories] emerge and explode … bad stuff on the bond markets, etc., then [X] was
brought in to sort it all out, brand ourselves better, infuse ourselves with an image as a powerful
player, get more of an ability to use PR to help our stocks, etc. (Interview F)

And, of course, media coverage can enhance the individual careers of brokers, too.

A lot of people are keen to get their opinion across … getting your view in print can be valuable.
You get more credibility. If people read it your profile is enhanced. Rightly or wrongly.
(Interview C)

So there are good reasons for sources within financial institutions to seek to cultivate
exchange relationships with journalists and they are aware of the bargaining chips they hold.

… I think there are three things which we can offer. Firstly, there’s access to us, to our work and
to the notes that we prepare. Then, there’s access to our traders, to their dealings and to the real
market information that they are using all the time. And then there’s having another ear to the
markets, to the rumours and for trying ideas out. For example, someone at Goldmans slipped
me a note yesterday demonstrating that the tax take implication from the pre-Budget
announcement on Wednesday was actually negative, not positive [i.e. the Inland Revenue
would lose rather than gain tax revenues] and that’s information that journalists will like to
have. If you [as a journalist] have good eyes and ears on the market you will look good to your
bosses … (Interview A)

Journalists are usually sceptical and aware that financial sources may be seeking to ‘talk
up their book’. However, when it came to hedge funds and their complexity some jour-
nalists felt less confident:

… One thing that journalists have to be more wary of these days, especially when dealing with
hedge funds, is not being misled. You have to be careful about fund managers … bankers …
talking up their own book … you can get caught out. For example, a hedge fund manager
might be saying that a deal won’t happen and it might be true or it might be that he wants to
move the price … There are more dangerous areas now where there is less transparency.
(Interview E)

Exchange relationships involving news sources and journalists involve potential sanc-
tions as well as incentives. Both financial sources and journalists acknowledged this:

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Manning 11

There is an ‘I scratch your back and you scratch my back relationship’ … journalists need
content and stories and hedge funds need publicity but not hatchet jobs … I’ll certainly be more
guarded with certain journalists … more open with others. (Interview C)

We have to be tough minded in approaching stories we write … and balanced in what we say
… but also to an extent we don’t want a particular contact feeling aggrieved because we seem
to be picking on them … (Interview H)

Journalists accumulating a reputation for too many critical ‘hatchet jobs’ risk the danger
of undermining the valuable informal relationships which circumnavigate the more for-
malised PR channels noted above. That is not to suggest that journalists will always
avoid critical stories; they often make the best copy but there are mutually acknowledged
restraints embedded within such exchange relationships.
However, the non-appearance of more critical stories in the years before the 2008
crisis cannot be explained simply in terms of the normative framework that structures
financial journalist and source relationships. The prospect of breaking a really big story
about imminent financial melt down would probably have overridden these subtle social
restraints. But the taken-for-granted and mutually shared understandings regulating
relationships between financial sources and journalists provided no incentives for
journalists to actively seek the material from their sources that might sustain a more
critical approach. The information flows sustaining these exchange relationships were
unlikely to produce the kind of information that would prompt journalists to anticipate
anything more serious than the kind of market correction normally expected through the
business cycle:

No … we weren’t scared of breaking the bubble but we just couldn’t anticipate the scale. We
knew the bubble would end but we didn’t anticipate the scale … the extremity of it … and how
much things had gone off the rails over the years. No hint of that ever came up in a routine way
… (Interview E)

In summary, the nature of exchange relationships between financial journalists and

their sources within the financial institutions contributed in four ways to this failure to
expose the antecedents of the crisis. Firstly, the use of more formalised PR channels in
recent years has diminished the flow of ‘contextual information’ – the ‘juicy tit bits’ –
that might sensitise journalists to significant underlying patterns. Secondly, the routine
news agendas of financial journalism would orientate journalists towards the kinds of
stories most comfortably serviced by the information generated through such exchange
relationships – company results, mergers and acquisitions, etc. This fostered a frag-
mented rather than a holistic approach to financial reporting, a focus on the particular
and the discrete, rather than the macro and holistic. Thirdly, the complexity of deriva-
tives and hedge funds and the dangers of being misled meant that financial journalists
were less likely to vigorously pursue these topics with sources. And, fourthly, the ‘checks
and balances’ or mutually acknowledged normative restraints that characterise exchange
relationships between journalists and sources operated to discourage, though certainly
not prevent, journalists from pursuing more critical lines of enquiry.

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12 Journalism

News agencies and financial news

A familiar theme in the literature is the extent to which newsroom cost-cutting measures
impact on the practice of journalism and make sustained investigative journalism much
harder to undertake (Aviles et al., 2004; Davies, 2008; Tambini, 2008). In news agencies
there has been a similar drive to lower costs, particularly staffing, combined with a search
for new ways in which information and agency services can be commodified (Manning,
2008). The ability of the main international news agencies to gather and supply financial
data placed them in exactly the right position to develop and expand specialist services
in the provision of financial data and related online services, as the demand for such data
grew in the period of financial market liberalisation over the last two decades. It is now
estimated, for example, that 90 per cent of Reuters’ revenues are generated from its
specialist financial data services rather than traditional newsgathering functions
(Citigroup, 2006). Sustained investigative journalism was never the forte of news
agencies but the pattern of diversification into specialist financial data services has made
it even less likely that the main news agencies would support investigative financial
journalism with the kind of holistic and longitudinal perspective required to grasp the
totality of the looming crisis of recent years. Indeed, at Bloomberg, the agency now
dominant amongst global financial institutions, journalists have been explicitly warned
that they face a routine of working ‘newswires seven to seven’ (Yarow, 2009).

Corporate power and financial information flows

So the exchange relationships that support the flow of information between journalists
and City sources were unlikely to prompt journalists to begin to ask the wider questions
about the underlying systemic stability of the global financial system, and the conditions
under which journalists work in both mainstream news outlets and news agencies made
it increasingly difficult for journalists to undertake sustained investigative work. But a
more complete explanation needs to also take into account the power structures that
circumscribe the information flows that journalists seek to access. Power, of course, is
exerted not only through intentional action but also through the relationship between
institutional structures and discourse (Foucault, 1979). The organisational structures
within the large financial institutions can produce a ‘silo effect’ (Tett, 2009: 299), so that
rather than sharing information, divisional rivalries within the same bank may actually
prevent the gathering and pooling of data in a way that allows a holistic picture to be
formed, even within the banks themselves. The banks do also, of course, operate formal
and legally binding control mechanisms over employees in order to exert control over
external information flows (Davis, 2002; Manning, 2001). A standard employment
contract will include a clause prohibiting any unauthorised dialogue with journalists or
other external organisations. Compliance departments in banks formally monitor the
research notes that employees produce. These controls are not entirely effective, as we
have seen, and financial analysts continue to brief journalists in ways not always
sanctioned by their employer. One of the reasons the Financial Times’ online site, ft.com/
alphaville, is regarded as such an important source of information within the City of
London itself is that it is widely recognised that the journalists associated with it, Neil
Hume, Paul Murphy and others, are so well connected and regularly receive ‘off the

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Manning 13

record’, unsanctioned information from within the major financial institutions.

Nevertheless, the banks can and do use their direct controls and sanctions: Paul Moore
(formerly Head of Regulatory Risk), for example, was paid nearly £750,000 as part of
his settlement from HBOS in 2004, and this included a ‘gagging clause’. RBS and the
Bank of England, of course, had managed to keep the former’s November 2008 £37
billion emergency loan entirely secret until the government chose to make it public 12
months later on 24 November 2009 (Mason, 2009a).
The state and formal regulatory institutions represent another centre of power which
manifests itself not only through political intentionality but also through the configuration
of departmental structures and their associated policy discourses (Manning, 1999).
Starkman (2009) notes that financial reporting in the USA tended to follow the lead of
the regulators in setting news agendas: as regulators relaxed their scrutiny after 2003 so
journalists turned their attention away from issues of financial regulation. As illustrated
by the success of the Bank of England and RBS in keeping billons of pounds of emergency
loan secret, when the political interests of government and interests in the City coincide
a powerful lock can be secured over information flows, despite tensions or conflicts of
interest arising amongst other financial partners. As Paul Mason (BBC Newsnight)
commented, ‘… Lloyds shareholders could be forgiven for asking whether the board at
this point were working for them or the government’ (2009a). Despite these quite
fundamental conflicts of interest no leaks emerged.

Dilemmas and ideology

To complete the analysis, we return to the perspective of journalists who were reporting
the crisis at the time. Several journalists have publicly discussed the dilemmas they faced
once the enormity of the 2008 crisis was becoming clear. Once they, themselves, had
grasped the extent of the crisis, they faced the question of whether or not to place this
information in the public domain, given that in mediated markets news coverage could
potentially bring about the very collapse that was feared. At this point, during August and
October 2008, Paul Mason’s contacts with ‘hedgies’ (hedge fund managers) had given
him an understanding of just how serious the situation was and that a complete collapse
of the banking system was possible. He chose not to pursue these rumours ‘too
boisterously’ (Mason, 2009a). Similarly, Hugh Pym (BBC Economics Editor) likened
the situation to war time when the BBC had to think seriously about the national interest
alongside its commitment to free reporting (Pym, 2009). Faisal Islam (Channel 4)
remembers ‘tiptoeing’ around the story of the Icelandic Banks.

… we tiptoed around it for about four or five months basically, making sure we put out a story
that was very delicately told, and in the end we pulled our punches … now I’d like to think that
that was the right decision but maybe it was a mistake to pull our punches, maybe we should
have said these banks were a complete joke and you should take all your money out … I don’t
know. (Islam, 2009)

So when finally contemplating the enormity of the potential crisis, journalists faced a
real dilemma in judging how much information to make public: provide a full story and

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14 Journalism

risk triggering the collapse of banks and perhaps a wider systemic economic failure, or
exercise a degree of self-censorship in ‘pulling punches’, and compromise a commitment
to free reporting.
But these dilemmas were faced in the months near to the final crisis. What about the
years between 2001 and 2007? Several journalists have said that in retrospect they are
surprised how much they embraced the ‘received economic wisdom’ that low interest
rates were established as a permanent feature of the landscape; and that growth could be
sustained in a way that would allow growing levels of banking, consumer and sovereign
debt to be tolerated without any serious consequences. In this sense, financial journalists
shared a ‘received wisdom’ with bankers and politicians, a set of assumptions about the
nature of the political and economic world that were profoundly ideological. As one
financial analyst explained, ‘balance sheets weren’t seen as efficient if they didn’t have
enough debt’ (Interview D). The assumption that interest rates could stay low and growth
sustained despite mounting debt was a picture that was articulated through the polity,
with the rhetoric of ‘an end to boom and bust’, and through the dominant neoliberal
discourses promoting de-regulated financial services as an unquestioned success. For the
BBC economics editor, Hugh Pym, this consensus was so strong that it inevitably mapped
the contours of BBC reporting. For him, it was not the role of the BBC to adopt a critical
position outside this consensus:

We all forgot previous market crashes and assumed that the boom of the early twenty-first
century was different … a collective wisdom or consensus signed up to by a very broad coalition
of politicians and media was that markets would ensure beneficial outcomes and that the
lightest of regulation was all that was required … And I think the problem for the media – and
especially the BBC – is to ask ‘Is it the role of the BBC to challenge a consensus which is as
broad as that, is it the role of any of us to challenge as broad an intellectual consensus or to
challenge from what might be seen as the sidelines at the time?’ (Pym, 2009)

So power here is exerted not only through the intentional proactivity of sources within
the financial institutions but through the inactivity of those actors sharing the taken-for-
granted assumptions about the economic and political world that characterised the neo-
liberal consensus of the last two decades, within media and political elites, as well as
within the City. Financial and banking sources shared with many journalists a common
set of assumptions about the financial world and this consensus included journalists
working for public service broadcasting organisations, as much as those employed by
newspapers explicitly sympathetic to neoliberalism, as the quote from Hugh Pym above
underlines.

Conclusion
Although some critics have been tempted to claim ‘a conspiracy’ in explaining the under-
reporting of the antecedents of the financial crisis of 2007–8, this article suggests that the
answer is more complicated. It is to be found at two levels. This article has aimed to
demonstrate that exchange relationships between financial journalists and their sources
were important because they rarely prompted journalists to develop more holistic and

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Manning 15

critical perspectives on the financial system, despite such critical conversations

sometimes actually occurring amongst staff within banks. But exchange relationships
and the power that is exerted over and through information flows are embedded in
particular political and ideological structures that underpin the ‘received wisdom’ about
the way things are. Thus, it is not exchange relationships alone but their enmeshing
within wider ideological and political processes that are crucial. Many financial
journalists embraced the received wisdom on financial markets and low interest rates so
that they did not pursue holistic questions via their exchange relationships with sources.
As the crisis actually unfolded in 2008 they faced some very real dilemmas in choosing
whether or not to vigorously investigate and report the information that was emerging
from within the financial systems around the world. At this moment choices were made
not to place particular information in the public domain but in the years preceding this it
was the routines of financial journalism, the deeper ideological assumptions underpinning
those routines, and the capacity of dominant political and regulatory institutions to shape
news agendas that linked together to defy the hope of those mid-20th-century mass
communication theorists. The financial media did not act as our antennae and they did
not warn us.

Acknowledgements
A version of this article was first presented at the 2010 MeCCSA Annual Conference at the London
School of Economics. The author is very grateful for the comments of two anonymous reviewers
on an earlier draft of this article.

Interviews
Names of interviewees and of some staff named in interviews have been removed at the request of
the interviewees.
a) Interview with London-based financial analyst working for large international bank, 30
October 2009.
b) Interview with broker employed on a sales desk in a large international London-based bank, 3
November 2009.
c) Interview with hedge fund manager conducted by the author, 11 November 2009.
d) Interview with London-based broker working for one of the large international banks, 22
November 2009.
e) Interview with assistant editor of a middle market national Sunday newspaper, formerly a
financial correspondent for 20 years, 3 December 2009.
f) Interview with London-based broker currently working for a second tier bank in the City but
with experience of working for two of the large ‘bulge bracket’ banks, 11 December 2009.
g) Interview with experienced financial journalist currently working for an online news source,
15 December 2009.
h) Interview with an economics correspondent working for a public service broadcasting organi-
sation, 16 December 2009.
i) Interview with former online news editor for a public service broadcasting organisation, 17
December 2009.
j) Interview with former economics correspondent with experience of quality newspaper and
broadcast journalism, 17 December 2009.

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16 Journalism

Hugh Pym (BBC), Faisal Islam (Channel 4), Larry Elliott (The Guardian), Michael Wilson (Sky)
all contributed to the Saints or Sinners? The Role of the Media in the Financial Crisis debate at
City University, 2 December 2009.

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Biographical note
Paul Manning is Head of the School of Media and Film at the University of Winchester. He has
previously published in the areas of news sources and power, news agencies and commodification,
cultural criminology and the relationship between drugs and popular culture.

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