An article about financial reform legislation seems too little, too late—and points out the need for better journalism in this area.

Headlined “Senate Financial Bill Misguided, Some Academics Say,” this New York Times article of May 3 was buried on Page A16 of the paper edition, and easily missable on the website.

Note the warning in the first sentence:

As Democrats close in on their goal of overhauling the nation’s financial regulations, several prominent experts say that the legislation does not even address the right problems, leaving the financial system vulnerable to another major crisis. [itals added for emphasis]

Some point to specific issues left largely untouched, like the instability of capital markets that provide money for lenders, or the government’s role in the housing market, including the future of the housing finance companies Fannie Mae and Freddie Mac. Others simply argue that it is premature to pass sweeping legislation while so much about the crisis remains unclear and so many inquiries are in progress.

“Until we understand what the causes were, we may be implementing ineffective and even counterproductive reforms,” said Andrew W. Lo, a finance professor at the Massachusetts Institute of Technology. “I understand the need for action. I understand the need for something to be done. But what I expect from political leaders is for them to demonstrate leadership in telling the public that we need to proceed about this in a much more deliberate and rational and thoughtful way.” … “It is unfortunate if we end up repeating history,” [Yale] Professor [Gary] Gorton said. “It’s basically tragic that we can’t understand the importance of this issue.”

A big part of the criticism is that the legislation largely addresses specific causes of the financial crisis, rather than systemic structures that may spawn new trouble spots if not fixed. Much more, these critics say, needs to be done, and done right.

…  [As University of Pennsylvania] Professor [David] Skeel [says]: “[W]e know from history that as soon as this legislative moment passes, the ball is going to shift back into Wall Street’s court. As soon as the crisis passes, what inevitably happens is that the people that are paying the most attention are the banks.”

The ball is not just in Wall Street’s court. It is also in journalism’s. If the biggest and best-funded media outfits can’t find a way to monitor the legislative process early and consistently and get warnings and useful information out in a timely fashion to actually have an impact, what’s the point?

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