Are the hacks to blame for the financial crisis?

Robert Peston and four other financial journalists got a grilling from the Treasury Select Committee today...

Last Updated: 31 Aug 2010

The Select Committee wanted to know whether irresponsible news reporting had exacerbated (or even caused) the recent economic turmoil – so inevitably, a disproportionate amount of time was spent on BBC business editor Robert Peston and his Northern Rock story of September 2007, which many believe caused the run on the now ex-bank. Peston, summoned along with four rival business writers, was predictably unapologetic about the media’s behaviour. But this hearing shows just how influential the leading financial commentators are becoming…

In the case of the Rock, Peston put up a spirited defence of his actions, claiming that the story was clearly in the public interest. The bank’s model was so flawed that it would have imploded anyway regardless of his contribution, he argued – while the run was largely due to the Rock’s poor PR after the story came out. He was also forced to deny that he had access to preferential information within the Treasury, and asked whether he was comfortable with becoming a market mover. In a line-up of rival hacks (who notably weren’t asked the same questions), this must have been quite an, errrr, ego boost...

Peston, a former MT columnist, was accompanied to Westminster by two other ex-MT contributors, Sky’s Jeff Randall and the Mail’s City editor Alex Brummer (whose book inexplicably got about four plugs), plus FT editor Lionel Barber, and the Guardian’s Simon Jenkins (a former editor of the Times and the Standard). And his fellow hacks were broadly supportive – albeit in a slightly gritted-teeth, it-could-have-been-us kind of way...

They agreed that Northern Rock only had itself to blame for its downfall (although Brummer did suggest that Peston’s ‘excitable’ style may have exacerbated the panic). And like Peston, they defended the rigour of their editorial process, bemoaned the opacity of the City and argued strongly against press regulation. Indeed, the committee largely failed to land any telling blows – not least because they seemed a bit unsure whether they were accusing the hacks of publishing stories too early (thus increasing panic) or too late (thus preventing the situation altogether).

Still, today’s hearing did highlight the huge role the media plays in shaping perceptions – particularly now the internet accelerates the spread of information. Stuart Duff, a partner at Pearn Kandola business psychologists, makes the point that media doom-mongering can ‘lead us into making emotional over-generalisations and catastrophising about the future’ – or to put it another way: ‘Irrational language drives irrational thought, which inevitably drives irrational action.’ So like it or not, Peston et al have a difficult balance to strike...

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Are the hacks to blame for the financial crisis?

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