Blame the messenger?
The blame game has started. Who's to blame for the run on the Northern Rock - the management for their over-reliance on the money markets to fund their business, the regulators for not reacting quickly enough to guarantee the safety of depositors' cash, or the depositors themselves for panicking and ignoring the reassurances of the authorities?
We have also seen (on this blog, amongst other places) that some people blame the ´óÏó´«Ã½ for its reporting of the crisis.
From the moment the story broke - a terrific scoop by our business editor Robert Peston on Thursday night - we were clear we had to handle the story carefully. We talked internally about the need to be responsible in our coverage - not to provoke panic but to tell people straight what was happening (see Peter Horrocks' blog on Thursday).
We set out to be restrained and factual. We have given plenty of air time to Northern Rock, to the Chancellor and the to reassure depositors and we have repeated those assurances throughout our coverage over several days. But despite this, obviously we had a run on the bank - I think this is down principally to two things:
1. The power of the images of long queues forming and...
2. The fact that for many people this was indeed a 'rational' thing to do, if you were exercising the precautionary principle. Until the Chancellor's announcement on Monday evening unequivocally guaranteeing that no depositor would lose money there was just a chance - a remote chance - that things might unravel in such a way that people would lose money (in part because the current compensation scheme does not pay back the full amount after the first £2000). So as one customer in a queue told us, "I'm not panicking, I'm being completely rational".
Should we have carried images of the queues? Of course we should and everybody did. The public needs to know what's going on - but we had a responsibility to do it in a balanced way. So the fears of those interviewed in the queues were set against the reassurances of experts from the financial services industry and the politicians and the regulators. It is not the fault of the ´óÏó´«Ã½ or the media in general that these assurances were not believed until the chancellor removed all doubt.
Comments
The Duke Of Wellington - "Publish and be damned!"
Madonna - "The biggest dare is to tell the truth"
As Peston's analysis has shown, there would have been enough money to satisfy all of Northern Rock's depositors - but only just...
I have recently read a book called 'The Wisdom of Crowds'. People acquire the knowledge to make decisions from a huge plurality of sources and media - and often behave far more 'rationally' than would be assumed by looking at the crowds queuing for their money.
The transformation from building societies [commonly owned] to banking plc has not occurred without changes to the business model which would be alien to many customer's understanding.
Banking means managing risk - and that means 'expecting the unexpected' and taking prudent steps to be able to cope with external shocks and mini crises. That Northern Rock were not is in itself something to set off the warning bells. This was shown by the long term drift in the share price.
Trying to blame Robert Peston for being the boy who exclaimed that the emperor had no clothes provides a handy scapegoat - but we the public have A RIGHT TO KNOW and if anyone has a DUTY TO REPORT IT, then surely it is the ´óÏó´«Ã½'s Business Editor.
It will teach a short, sharp, salutary lesson to the bankers to be a bit more bloody careful with what they do with our money, and wake up the Bank Of England to discuss whether capital adequacy rules and banking regulation are strong enough in this country.
The day stuff like this does not get reported because it is inconvenient to banking executives and government officials is the day we cease to be a democracy.
Wrong, wrong, wrong, wrong. This time the ´óÏó´«Ã½ is WRONG!
The ´óÏó´«Ã½ caused mass hysteria amongst NR customer's because of a lack of sensational news stories.
Some business reporters where agressive and irrational in their reporting standards, the ´óÏó´«Ã½ devoted too much time to this story and ignored any other bank. This story was unbalanced from start to finish.
Where was the interviews of those not taking their money out, what about NR's employees?
I am afraid the comments on Horrock's blog just says it all, the impression we all got (the viewers) is that the ´óÏó´«Ã½ shoved this story (factual or not) down our throats and created panic. FACT!
Unblievable! You refer to Peter Horrocks blog further down this page but of course in one breath effectively completely dismiss all of the adverse comments on it, even those pointing to specific comments made by ´óÏó´«Ã½ reporters which can only have added to the run on Northern Rock.
Tell me, is there really any point in these blogs when all that ever happens is the complete dismissal of any comments which don't completely agree with the ´óÏó´«Ã½ view of the world and its own performance in particular?
From a rational point of view this probably isn't the best view, but on another level it's wonderful to see the banks being given such a fright. Hopefully more of them will suffer, a pay back for their greed on one hand, and their high-handedness in dealing with the populace on the other. I think the ´óÏó´«Ã½ handled it fine, if it were me I'd have been in there sticking the boot in.
There is no problem in the fact that you reported the story, or that you even covered the queues. But I think there was a linking of issues that added to saver panic.
The main problem lay in the lack of numbers. Although 2 billion was reported pulled out of the bank, you didn't put that into context - the saving level in the bank is far higher than that. So the impression was given that the bank was running out of cash.
Secondly was the share price storey. The share price fell basically because city investors are cowards - they even started selling shares in banks that are very unlikely to be affected by the present drying up of credit. But by associating this second story with the first that added to the idea that the bank was running out of money.
Then there were the odd irresponsible report. Like the presenter in dateline London who commented that he should grab his wheel barrow and get his money out!
Banks once upon a time,kept a percentage of money in reserve,to pay out a surge in withdrawals.The UK and most other banks now have no reserve,believing,that money not earning is no money at all. Just another example of the capitalist moneymaakers at work!Whatever became of the old Post Office bank? Privatised? In the 20s & 30s most working class was either out of work or struggling to get by on low wages.But along came the global moneymakers,they did away with the gold standard,and gave governments free rein to print money.What next!
Your coverage included live broadcasts of queus which invited people to join that que to get on the telly, increasing the size of the queu you are filming, and giving them the opportunity to increase the panic by repeating false information. So you it was their fault because they were miss informed (by poor vox pop based coverage) and its ok because other organisations were doing the same? you have terminally damaged a north east business on the basis of false information. If you want to do vox pops of eccentric people why not bring back "that's life" with esther rantzen
Every time I saw the media images I kept thinking about Mary Poppins and the bank scene.
The two problems the ´óÏó´«Ã½ had was that:
1. A great many people don't understand banking. There was never any danger to the savings accounts. Perhaps they would feel safer if they kept their money in an old sock under their mattress.
2. People are like sheep. They followed the rest of the flock even though the flock was wrong. The only danger to Northern Rock was Northern Rock customers.
No matter how the ´óÏó´«Ã½ or other media outlets reported this matter the lack of understanding meant that the run on the bank was inevitable.
No bank has gone bust, no-one has lost any money, yet I see 'Banking Crisis' all over the ´óÏó´«Ã½ News.
It's the same hype you always try to spin into your stories to fill in the rolling news. A short term problem with liquidity turned into a 'crisis' by TV news.
Whilst I enjoy this forum to find out more about the considerations that go on behind a story, I do find the conclusions (the ´óÏó´«Ã½ was, is, and remains, correct) somewhat tiresome.
Are you really saying that there are no lessons to be learnt from this unprecedented story?
What a shame this blog wasn't running after the Gilligan report on the Today programme!
The thing is, people don't believe what the 'experts' say as they probably have their money nice and safe somewhere else and are just trying to protect the banks profit margin.
I have complained about the ´óÏó´«Ã½'s reporting of this issue - no reply yet!
The fact remains that many of the commentators and presenters on the ´óÏó´«Ã½ remain ignorant of the issues on which they comment and manage debate. Jack of all trades, master of none. Their role is a very challenging one, however if due to a lack of expertise they deliver an amateur performance, for example in failing to challenge contributions from members of the public that are patently misinformed, or indeed join in the bullying of 'experts' (Mayo)they add weight to those views.
Thus far I am far from reassured by this self regulation - an independent view would be welcome.
The impact on the North East's economy is devastating - ´óÏó´«Ã½ News sought to 'form' the news rather than report the news, an all too common feature of their coverage over the past ten years.
In respect of the brain drain from the North East that will ensue, do ´óÏó´«Ã½ News executives care - I think not, and that's a polite version!
So no-one lost any money (or were ever likely to). No bank collapsed (or was ever likely to), yet the ´óÏó´«Ã½ has been pushing 'Banking Crisis' headlines all week. Is it any wonder some people panicked.
Interesting quote from the Governor of the Bank of England today, something about 'shouting fire in a cinema'. Well ´óÏó´«Ã½, just who do you think he was referring to?
Hogwash! The ´óÏó´«Ã½ knew that showing pictures of queues would create a sense of panic. They did so just to add excitement to a dull story and exascerbated the problem, leading to bigger losses for investors.
How arrogant & disingenuous to claim innocence of guilt!
I have tried commenting on Daniels blog yesterday but they never made it to the ´óÏó´«Ã½ website. Odd.
Anyway, you are wrong, the ´óÏó´«Ã½ is responsible (in a large part) for everyone withdrawing funds from Northern Rock (NR). Barclays also borrowed from the Bank of England (BoE) and yet this was a small story on the ´óÏó´«Ã½.
Aggressive reporting and interviewing techniques where used, unprofessional behaviour and scare tactics comments used by the ´óÏó´«Ã½ created the problem.
Get real Mr Dodd and Horrocks and accept your responsibility.
Nope, you are wrong. Without a doubt wrong.
Nothing about the way it was reported was balanced. It wasn't balanced with the Barclays facility a few weeks previous, it wasn't balanced in the fact that a bank can be denied the facility (as in barings bank) and it wasn't balanced in telling customers that their money was safe from the outset.
You caused the downfall of a company that is unlikely to recover. That is a serious breach of confidence in ´óÏó´«Ã½ journalists - let alone trust in the banking system....
Just admit it - you just loved spicing it up as much as you could. Pure tabloid journalism - which is, of course, the mainstay of ´óÏó´«Ã½ news reporting these days. When are you finally going to axe Newsnight, Radio 4 and the World Service, in favour of more vox pop and celebrity cleavage?
Andrew @16 - It's ainine to place any blame on the ´óÏó´«Ã½ for what happened to Northern Rock. They were *in* trouble to begin with, and the ´óÏó´«Ã½ had an obligation to report it.
If Northern Rock was in so much trouble, and then went down in flames, and people had *not* been told of the problems, and lost all their money, people would be baying at the gates of the ´óÏó´«Ã½ for not having told them.
Northern Rock was in trouble, the ´óÏó´«Ã½ isn't responsible for it's troubles, and it's better to be safe than sorry. *Especially* given how much people's savings are important in trying to just handle day to day living in the future.
"Mob mentality" caused the withdrawal run - just as "Mob mentality" drives people to try to assign blame to the wrong place.
NORTHERN ROCK
I am one of thousands of people who reinvested and then decided I wanted my money to be safe and gave notice of withdrawal again. I am now told that having already waited 9 days with no confirmation of what was happening that it will be some time never before my application is processed. This is not good enough because I stand to lose a considerable amount of money if they go under and I am losing money by not having my capital to reinvest elsewhere. You may have faith that it is safe and they will continue as Northern Rock but like many other investors I have my doubts that it can be propped up by the Government for any length of time.I now intend to withdraw all my accounts with them as they are obviously hanging on to all they can at the customers expense to give a better picture of their failing company.