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Wells, Rob. The Enforcers: How Little-Known Trade Reporters Exposed the Keating Five and Advanced Business Journalism. Urbana: University of Illinois Press, 2019, 272 pp., $27.95. Reviewed by Joseph Weber, University of Nebraska-Lincoln (email@example.com)
The savings and loan crisis was a giant business and political story in the 1980s and early 1990s. One-third of the nation’s thrifts failed, leaving taxpayers with billions of dollars in costs. Early on, politicians and regulators embarrassed themselves by caving in to demands for lax oversight made by S&L executives, some packing hefty campaign contributions. Few individuals or institutions covered themselves in glory.
Those tarnished included the national media, as Rob Wells so damningly points out in The Enforcers: How Little-Known Trade Reporters Exposed the Keating Five and Advanced Business Journalism. Mainstream media missed the story for at least a couple years, during which investors, savers, and taxpayers lost hundreds of millions of dollars. Had these public guardians turned their Klieg lights on earlier, much misery could have been avoided. “We nibbled at it,” former Wall Street Journal Washington bureau chief Albert Hunt said afterward, as Wells reports. “We should have been covering it more in ’86 and ’87. It was elusive. It was a Texas story. It was a Michigan story. It was a Maryland story. It was a California story. But no one put it together.” Another reporter explained: “It was all too complicated and boring to interest many mainstream journalists.” And a top TV news executive complained that the saga didn’t offer enough pictures. (p. 3)
But some journalists rode the story early and hard, blazing a trail for inattentive bigger outlets. These were reporters at trade journals, the often-overlooked and sometimes-derided publications focused on particular industries. As Wells richly details, the leaders on this story worked for National Thrift News, a 12,334-reader circulation newspaper founded in 1976 that has evolved into the now-digital National Mortgage News. It was edited by a tough-minded, sometimes-volatile English immigrant, Stanley K. Strachan, who had earned a high school degree at night after dropping out of school and who never went to college. A classic shoe-leather reporter, Strachan started as a copyboy for the New York Journal American, moved from sports writing and police reporting for a New Jersey weekly through reporting and editing slots at the American Banker trade journal to freelancing for The New York Times and other publications. He then became a part-owner and editor of NTN.
Under Strachan’s guidance, the NTN journalists in the fall of 1987 broke such news as the efforts by Phoenix developer and thrift-owner Charles H. Keating Jr. to co-opt five U.S. senators, including the late Republican presidential contender John S. McCain III and four Democrats, with $1.3 million in campaign contributions. Those senators intervened in a regulatory examination of Keating’s California-based Lincoln S&L, “pressing for more liberal appraisals of the thrift’s real estate investments,” NTN reported in September 1987. (p. 138) But it wasn’t until the spring of 1989, when Keating’s thrift failed, that major news organizations awoke to the tale. And it was only when Congress started digging publicly that the media floodgates opened. Indeed, the story mushroomed because more than 20,000 mostly elderly bondholders in Lincoln’s parent company, American Continental Corp., had plowed some $250 million into the company, only to see it go bust. As Wells reports, American Banker journalists had raised a red flag about the aggressively marketed and uninsured bonds even earlier, in early 1987, beating NTN, as well as the major media.
Just why nearly all the major media slept through crucial years of S&L decline is a key question Wells explores. His unsettling answers include big media’s dependence on official sources, such as headline-seeking congresspeople and sometimes-captive regulators, rather than pursuing the dogged industry reporting that trade journals can do well. Even political reporters, busy following the deregulatory efforts of the time, were led astray by PR people who peddled the line that it wasn’t unusual for five senators to be in a thrift-owner’s pocket (something Strachan, who died in 1997, knew was false). Financial illiteracy, particularly on accounting, also figured in, as it plagued the era’s media.
Wells also deftly shows how some tenacious trade journals do outstanding work, despite great odds. Unlike big outlets, such journals can be vulnerable to hobbling lawsuits. Dependent on the goodwill of industry advertisers, moreover, trade book journalists know that unflattering news coverage can be perilous. Much depends, Wells shows, on the spines of individual editors. He suggests that Marx-inspired political economy theory helps one see how critical coverage can be compromised by the “significant financial incentives” of corporate power and capitalism, but he also shows how gutsy people can overcome a “hegemony of ideas” and stand up for truth-telling. (p. 87) Making thirty-year-old events relevant, Wells offers intriguing grace notes on President Donald J. Trump, exploring similarities between him and Keating. As developers, Wells notes, the men shared an affinity for boosterism, an aggressive personal management style, unpredictability, litigiousness and a high appetite for risk. They also both “relied on and reviled the media,” he reports. (p. 75-76) Their norm-abusing patterns can have devastating consequences, and journalists can learn much about them – and about their own shortcomings – through such works as The Enforcers.