Between Mistakes

Adventures in Journalism

Do you know the difference?

Lesson One

When you start out, work for obscure places. When you make mistakes, only a small group of people will know.

Lesson Two

Facts are important, but they don’t tell the story. The story needs context and perspective. You need to think big. A story needs to be right.

Lesson Three

Ask stupid questions

Lesson Four

Listen to cranks and outsiders

Lesson Five

Be prepared for resistance

magnetar

Journalism and the Financial Crisis

Big Simple Questions

National Public Radio came to us in the summer of 2009. They asked a very simple question:

What did bankers know about the financial crisis?

The Project: The Wall Street Money MachineThe dominant narrative: 100 Year Flood

When?

Great financial journalism focused on the events of the fall 2008: fall of Lehman Brothers, AIG

We decided to look at late 2006 early 2007

What did we find?

Some investment bankers and investors took advantage of the crisis, made it worse

One hedge fund called Magnetar had helped create $40 billion worth of bad mortgage securities deals: Worked with investment banks to make them weak, then bet against them

Built to Fail

Results

Magnetar: under SEC investigation

JPMorgan: paid $154 million fine

State Street Global Advisors: $5 million fine

Merrill Lynch: under SEC investigation

Standard & Poor’s under SEC investigation

Multiple private lawsuits

How did we find Magnetar?

Sources!

Hurdles

No SEC filings

No list of CDOs

No list of investors

No list of employees at banks who worked in CDOs

No prospectuses

No lawsuits

No investigations

Constellations

We actually had to go down a list to figure out how many constellations there were

Draco:

How did we find people?

Asked people for suggestions, and then asked those people for suggestions

Google searches for people who had talked about structured finance to the media

Searches of conference attendees

Facebook, LinkedIn, other social media

Tips for finding sources

1. Think about who speaks to journalists, who would speak to you

2. Find former employees

3. Find disgruntled workers, whistleblowers, people who have sued (for any reason): they may be crazy but they may be useful.

4. Surround a story: Find competitors, suppliers, customers, regulators

5. Don’t just go to the top: Talk to the middle and lower ranks, too

6. Talk to investment bankers and lawyers. Why? These are people who see lots of different companies.

7. Talk to people who talk to the press.

8. Lurk: Go where your sources go to drink, eat

9. Ask everyone you talk to for other people to talk to

How do you get people to talk?

Once you have a source, how do you get them to talk?

Emphasize fairness and accuracy

Honor them by listening, trying to understand the depths and complexity. You aren’t there just for a quote.

Flattery. It never hurts!

Meet in person

Offer to talk on background: Define this!

Ask them to give you documents. (Then verify that they aren’t fake.)

BUT: Don’t make bad promises, like that their names will never appear in the story

Front door or not?

Get a sliver of information and then go back to them to force them to respond

Alcohol helps!

Reporting principles

Get documents

Balance? No. Your job is truth, not balance.

Multiple sources

No surprises: Every subject gets a chance to respond. They should know everything you are going to report about them. THIS PROTECTS YOU!

Writing the story

Clear: Even on a complex subject, write for everyone (This will help you think about a subject).

Try to be entertaining and interesting!

“Investigative” journalism in the U.S. is often boring. We try not to be.

We use cool graphics

We will try anything

Lessons

Don’t be afraid to revisit a story that seems old

It’s not a matter of whether something was illegal – it’s a question of right and wrong. Does it shock the conscience?

Don’t be afraid to be entertaining and interesting