Bloomberg wins in smackdown with Fed

Felix Salmon of Reuters comments about the letter the Federal Reserve Board sent out Tuesday claiming “egregious errors” in coverage by Bloomberg News and how the news organization used it to its advantage.

Salmon writes, “Bloomberg did not let the opportunity go to waste. It’s clearly the main object of the Fed’s ire, but because it isn’t named, it can do two rather clever things in its official response. The first is to respond to the Fed’s complaints by citing various different stories it’s written over the years — since the Fed never actually specified which story or stories it had issues with. And the second is to simply deny that it said what the Fed is complaining about at all. When the Fed, for instance, says that ‘the articles misleadingly depict financial institutions receiving liquidity assistance as insolvent,’ Bloomberg simply and effectively replies that it ‘never described any of the financial institutions mentioned in its bailout stories as insolvent.’

“All of which makes the exchange less of an actual debate and more of a case of two powerful institutions talking past each other.

“The Fed has various blogs; it could easily have used one to single out specific errors in the Bloomberg article, which Bloomberg would then have had to respond to directly. But instead it just writes a memo talking vaguely about ‘these articles’, and in doing so plays straight into Bloomberg’s hands.

“And of course both the Fed memo and the Bloomberg response perpetuate the myth that Fed officials don’t talk to Bloomberg reporters on a daily basis. There’s lots of back-channel noise, here, which isn’t seeing the light of day; the memo and official response are just the carefully-chosen public face of a debate which is happening primarily in private. (The Fed’s a bit like Goldman Sachs: it loves talking ‘on background,’ but hates saying anything on the record. Which is why a large part of Fed-watching is working out which reporters are getting the coveted phone calls from Fed board members, and then reading between the lines to work out who’s telling them what.)

“Bloomberg has won this particular round, just because it’s being very open about what it’s saying, while the Fed memo seems mealy-mouthed and less than fully open about what it’s trying to say. If you’re going to complain about ‘egregious errors and mistakes,’ it behooves you to be specific about exactly where the errors and mistakes lie, and to quote them directly. If you don’t do that, you automatically look as though you have a weak case, and you open yourself up to counterattacks like the one from Bloomberg.”