Hank Paulson on journalists' role in the crash

"Those people who know me well know I'm pretty direct," Hank Paulson told a room full of journalists in New York on March 1st, as he analyzed the performance of news organizations during the economic crisis.

The former treasury secretary, addressing a meeting of the Committee of Concerned Journalists, was certainly direct in highlighting several examples of failures by the media, though he also handed out plenty of praise for, as he put it, professionals doing a tough job in difficult circumstances. The first failure, he said, was a tendency to run inaccurate or half-baked stories because of the pressure to deliver scoops. One example of these "premature stories with unexpected consequences" was a report in December 2008 that the government was planning to use Fannie Mae and Freddie Mac to provide low-cost mortgages to reduce foreclosures. According to Mr Paulson, this misrepresented as policy an idea that was still being considered as one option among many and was quickly rejected. "I can think of no industry more competitive than the press," he said—and as a former investment banker he should recognize competition when he sees it. The second failure was poor or sensationalist "word choice". When Mr Paulson was looking to make investments in troubled banks, reporters were quick to use the N-word -- nationalisation -- even though the sort of investments the Treasury was looking to make were designed to ensure that there was no "government role in decision making" at the banks, which is what Mr Paulson means by nationalisation. Calling the investments nationalisation "didn't help educate readers but sparked a (negative) market reaction," he argued.

What could be done to improve the performance of the news media? First, hold reporters to account for the accuracy of what they write. People will sometimes make mistakes, but they should be held to account when they keep getting things wrong—"from the most junior reporter to the biggest star." Also, news organizations "shouldn't punish people if they get scooped", since that provides too great an incentive to publish prematurely.