Financial History Issue 121 (Spring 2017) | Page 23

By Rob Wells

One of the improbable tales of the savings and loan crisis involved a small financial newspaper , the National Thrift News , which beat giant newspaper rivals at exposing the Keating Five affair , one of the seminal influence peddling scandals of the 1980s .

This episode illustrated what a lot of Wall Street insiders already knew : that Stan Strachan , editor of the National Thrift News , was a force in financial journalism during this period . Strachan ’ s scrappy trade newspaper uncovered how a notorious banker , Charles Keating Jr ., got five US senators to pressure regulators to ease enforcement against Keating ’ s Lincoln Savings . This episode — nearly two years ahead of reporting in The Wall Street Journal and The New York Times — would later be the focus of congressional hearings and cap Keating ’ s downfall . Lincoln Savings later collapsed and cost taxpayers an estimated $ 3.4 billion . Keating eventually was sent to prison for 12 years on securities fraud and other charges .

This story also fit an unusual narrative about Strachan and his newspaper : it was yet another article that would anger powerful advertisers and subscribers of the National Thrift News . Strachan ’ s ability to cover the industry as an insider and push to clean it up made the National Thrift News an unusual and important publication in business journalism . This small newspaper also influenced American finance , particularly as it highlighted corruption in the mortgage bond markets , which grew rapidly during the 1980s .

Strachan died in 1997 , but this financial watchdog legacy remains relevant for today ’ s business journalists , and journalists of all types , as the news industry tries to find its way in the age of Twitter and Facebook . He carefully walked the line between industry insider and outside watchdog , a difficult balance for any contemporary journalist . Strachan showed that smart beat reporting of companies and industries can lead to significant insights and yield investigative reporting that can serve

Financial journalist Stan Strachan , circa 1960s , prior to his position at the National Thrift News . the general public . The National Thrift News was ignored by larger news organizations but eventually won the recognition it deserved , not only within the genre of trade journalism , but also within the broader field of journalism . For example , it won a George Polk Award for financial reporting in 1988 for its coverage of the savings and loan crisis ; the New York Financial Writers Association gave Strachan a lifetime achievement award in 1990 .

This recognition was slow to come , however . National Thrift News was a trade newspaper , a genre of publications that cover specific industries and typically do not feature sports , entertainment or crossword puzzles . In the past , mainstream journalists have dismissed the trade press for failing to take a tough , watchdog stance in their reporting , as well as for failing to frame their journalism in the broader context of society . The limited scholarship in this field shares this critical view . James Ross wrote in Columbia Journalism Review , “ Trade publications have long been consigned to a netherworld somewhere between journalism and public relations .” In other words , trade newspapers historically have been low in the media industry ’ s pecking order .

This lack of respect may be why Strachan and his reporters had to wait nearly two years to see any impact from their reporting about the Keating Five event . The senators were Democrats Don Riegel of Michigan , Alan Cranston of California , John Glenn of Ohio , Dennis DeConcini of Arizona and Republican John McCain of Arizona . Keating gave campaign contributions estimated at $ 1.3 million to the five . Major news media ignored the National Thrift News scoop , even though it described behavior that would lead to ethics charges against sitting US senators . At first , Strachan wrote , “ Nothing happened .”

It wasn ’ t until Lincoln collapsed in April 1989 did the major papers begin reporting on Keating ’ s efforts to get Congressional leaders to intervene in the regulatory process . By the fall of 1989 , wallto-wall press coverage made Keating a household name , synonymous with the savings and loan debacle , a banking crisis that cost taxpayers an estimated $ 125 billion to clean up .

Mainstream media may have ignored the National Thrift News , but they could have learned a lot from it . While general business news publications ( those that serve both consumers and business people , such as The Wall Street Journal and Fortune ) have evolved from the trade press , they are criticized for sharing the same worldview as the people they cover . Intellectual capture and excessive reliance on industry to frame what is and is not news remain significant problems for general business journalism . This was one reason why some news organizations didn ’ t pick up on warning signs ahead of the 2008 financial crisis , noted Dean Starkman , author of The Watchdog That Didn ’ t Bark : The Financial Crisis and the Disappearance of Investigative Journalism .

National news media clearly failed to sound the warning about the savings and loan crisis until it was too late , many media historians say . A 1993 federal commission named to study the savings and loan disaster , the National Commission on Financial Institution Reform , Recovery and Enforcement , wrote : “ The news media were largely silent during the period when most of the damage was being done . The news media missed one of the most costly public debacles in US history .”

The National Thrift News didn ’ t miss the story . It had a strong following among mortgage bond traders , regulators and housing journalists in the 1980s . “ They were fearless ,” recalled Christi Harlan , a former Wall Street Journal reporter who contributed to National Thrift News in the 1980s . “ They were not afraid to take on the industry and the players who were buying subscriptions ” to the paper , she added .

One of Strachan ’ s best sources and closest friends was Lewis Ranieri , the legendary Salomon Brothers executive and pioneer of the mortgage-backed securities market . Ranieri said Strachan did not seek out to write critically of his friends and business associates , but he did not shy away from it . “ He didn ’ t do it on purpose , but it didn ’ t stop him . Stanley could like somebody a great deal and be very critical of him ,” Ranieri said .

Years after his death , Strachan left a strong impression on his reporters . Several described how Strachan pressed them to

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