While America Slept

The blame game in the financial meltdown has fingered plenty of guilty parties, including mortgage brokers, subprime lenders, credit rating agencies, Congress, the Federal Reserve, homebuyers who had no business buying homes, Fannie Mae and Freddie Mac.

All of them and more share responsibility for our current fix. Some also say the media failed to warn us of trouble ahead. Chris Roush, a business journalism professor at the University of North Carolina, refutes that charge in a pithy article he wrote for the year-end issue of the American Journalism Review. His piece, “Unheeded Warnings,” ticks off a litany of stories that focused on problems in the credit markets before they seized up in August of 2007.

Thoughtful and informed Minnesotans I spoke with seem in tune with Roush. “You can’t blame this on the press,” says Steve Leuthold, chief investment officer at Minneapolis-based Leuthold Group, LLC, a financial research and investment firm. “Nobody I knew ever talked about this whole credit system seizing up the way it did.”

Chuck Denny, retired CEO at ADC Telecommunications in Eden Prairie, says, “I think the media were doing their job.”

Claudia Parliament, director of the Minnesota Council on Economic Education in St. Paul, says partly the trouble is rooted in a widespread lack of financial literacy. Given that, it seems unlikely Americans would heed warnings of economic trouble, regardless of what media outlets said.

Roush notes that as far back as 1994, veteran writer Carol Loomis warned Fortune readers that derivatives could be “a villain, or even the villain, in some financial crisis that sweeps the world.” In 2002, Warren Buffett underscored that concern with his famous admonition that these often exotic instruments are a “financial weapon of mass destruction.”

We should have heeded Buffett’s warning. In his article, Roush focuses on print publications “with the power to direct the conversation” among “readers who care” about business and the economy. He says the New York Times, Wall Street Journal, Washington Post, Fortune, and BusinessWeek all issued cautionary articles.

The warnings weren’t limited to business journalism’s heaviest hitters. Roush notes that some winners in last year’s best of business competition hosted by the Society of American Business Editors and Writers (which judged material published in 2007) focused on mortgage or credit problems. Both Twin Cities dailies published many stories about the troubled housing market before the bubble burst.