The Most Important Financial Journalist of Her Generation
For the public, the financial crisis has demonstrated the degree to which Morgenson matters. We've just experienced a long period of radical deregulation that touched off a sea change in the business culture and at the same time created an information vacuum. How was the public to know about Wall Street-backed predatory lending and the scale it had reached? Most of the business press ducked the challenge, sticking largely to tried-and-true formulas: personality profiles, scoops handed out by insiders and after-the-fact explanations of the latest corporate scandal. And while the press did publish some investor- and consumer-oriented stories about the housing bubble, defective mortgage products and the like, it was culturally incapable of grasping the big picture--that, for instance, the financial sector had gone rogue.
Morgenson got it then and gets it now. Ignoring the eye rolls of her peers, pushing back against the lawyers and the flacks, she aims her reporting straight at the heart of the matter--and in doing so points the way for a more credible business press. Many groaned, for instance, at her repeated pounding in recent years on excesses in executive compensation. But we now know that compensation lies at the center of today's crisis, since everyone from mortgage brokers to Wall Street executives was given incentives to sell financial products without regard for their quality. Similarly, what Morgenson saw as a fairness problem became a systemic one, since income distortions left a borrower class too strapped to repay consumer loans. More broadly, her tone of urgency and accountability gave the public the message it needed to hear: something in the system had gone deeply awry.
Morgenson made fairly strenuous efforts to talk me out of this profile, arguing variously that she wasn't the story, that others in the mortgage mess were far more significant, that attention might impair her effectiveness, etc. (As a thoughtful journalist, I of course blew all this off.) Waiting for her in a restaurant around the corner from her office at the Times, I'm more nervous than I expected to be. Not helping my sang-froid was the one-word description a friend at the Times offered of Morgenson's grimly focused demeanor in the newsroom: scary. She sweeps in--tall, blond hair well coiffed at shoulder length, blue eyes, carrying stuff, chattering apologies about being (two minutes) late--and I'm relieved and surprised to find how quickly it feels like I'm talking with an old friend. Over eggs and granola, she is chatty, even dishy and disarmingly open. At a certain point, though, I touch a nerve--something to do with her prerogatives at the Times, I think--and the chitchat ceases. Her eyes narrow and now seem icy as she stares across the table. I start to understand what it is like to face off against her.
But that's part of the formula. She has a lot of power for a business reporter, and she acts like it. When I ask, for instance, what she thinks of her former employer, Forbes--a question that would seem to call for some diplomacy--she says simply, "Awful. Terrible." Breaking a few more industry taboos, she then unfavorably compares current Forbes editor William Baldwin with his predecessor, the late Jim Michaels, one of her mentors.
"Jim Michaels had a knack for taking a small story and making it big," she says slyly. "Bill Baldwin has a knack for making a big story small."
(Baldwin, reached later, brushes off the slam. "Forbes has always been brusque in judgment and tough on people, and if you dish it out you have to learn to take it," he says.)
Still, plutocrats and liberals expecting or hoping to find a stern ideologue in Morgenson--or, really, sweeping views from her of any kind--will be disappointed. For one thing, many will be surprised to learn she's a moderate Republican. "I believe in capitalism," she says. "To me it's natural that I would go after the people who are wrecking it."
What becomes apparent over several conversations is that Morgenson is a business reporter--no more, no less. She's more likely to mention investors as her main concern than readers or "the public." Her views are pragmatic, sometimes small-bore to the point that her detail-laden writing can turn off casual readers. Her fixes are meliorative and not particularly original--better regulation, more competition. Her radical idea is, basically, that regulators should regulate, rating agencies should rate according to the merits of the credit, corporate compensation committees should set executive pay at arm's length, directors should look to the interests of shareholders first, large shareholders should act like the owners they are and mortgage lending should be something other than a game of three-card monte. That these views are seen as "antibusiness" in some circles tells us less about Morgenson than about the ethical breakdown among this generation's corporate elites.
"If you're going to believe this is an ownership society where you're going to take part in the upside, if you're going to participate in a sort of populist form of capitalism...you have to be confident that the agents have your best interests at heart," she says.