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for casual readers of business coverage—that is, most of us—the past 18 months have been a crash course in things we never knew existed but that, we are told, have already done us all irreparable harm. Not only are the problems catastrophic, goes the somewhat frustrating message, but it is already too late to do anything about them—other, that is, than pay for them.

In looking back on how we got here, the business press assumes a tone of rueful omniscience, as in this late-2007 New York Times piece on regulatory laxity under Alan Greenspan: “Had officials bothered to look, frightening clues of the coming crisis were available.” Of course, the clues the Times cites in the very next sentence—the ceaseless research of the North Carolina-based Center for Responsible Lending—were available had anyone bothered to look. So, a reader might well ask, why didn’t the media?

I worked as a Wall Street Journal staff writer for eight years ending in December 2004 and now critique the business media full time at the Columbia Journalism Review. I’ll attest that business journalists as a rule are as smart, sophisticated, and plugged-in as they seem. And yet that army of professional business reporters—an estimated 9,000 or so nationwide in print alone—for all practical purposes missed the biggest story on the beat. Why?

In October, Howard Kurtz, the Washington Post media critic, rounded up the opinions of a few practitioners. Some bravely took the blame (“We all failed,” ventured cnbc ‘s Charlie Gasparino), but the majority chose to blame the audience: “If we had written stories in late 2000 saying this whole thing’s going to collapse,” said Fortune managing editor Andy Serwer, “people would have said, ‘Ha ha, maybe,’ and gone about their business.” Ditto Marcus Brauchli, a top Wall Street Journal editor during the bubble before taking over last July as executive editor of the Washington Post: “I regret that when I was at the Journal, we didn’t keep the focus on some of these questions, including the possible moral hazard posed by the structure of Fannie Mae and Freddie Mac. These are really difficult issues to convey to a popular audience.”

There was a handful of heroes at the major publications who tried to get the word out. But the good, hard-hitting, arm’s-length stories will have to be compared to what else was gushing out of the 30-inch business-news drainpipe—those Citigroup earnings stories, those edgy-yet-flattering profiles of Merrill Lynch’s Stan O’Neal, Lehman Brothers’ Dick Fuld, et al., the pieces noting how Countrywide Financial’s Angelo Mozilo liked to dress well, etc., not to mention the Home Depot marketing stories, the personal finance columns, and all the cheerleading and Flip That House fluff that diverted resources from the real task at hand. What was really the business-press message? It was certainly not that mortgage lenders and Wall Street had linked up to flood the market with defective products.

it is true , though, that the circumstances conspired to make the press’ job harder—much harder—than usual. Consider, first, the industry’s own failing financial health. In 1998, the New York Times Company’s newspaper segment generated profit margins of 24 percent—about the sector’s average then—according to John Morton, a leading industry analyst. The comparable figure for the first half of 2008 is 8.5 percent. This so-called margin compression affects the newspaper industry generally, extends to the magazine business, and has led to a collapse in stock prices across the board. The Times Company traded for $50 a share as recently as 2002. Today, it’s around $10 and still considered a “sell” by some analysts. Its market capitalization—stock price multiplied by the number of shares outstanding—is $1.5 billion, half of which is its stake in its new Eighth Avenue headquarters. The value the market places on its prospects is basically zero.

The demise of the mainstream media, especially newspapers, has been forecast for decades, but the years following the tech wreck of 2000—the period of the housing bubble—opened a new, defining chapter. The most shocking plunge in values came, Morton says, around mid-2007, just about the time the credit crisis burst into full view. For instance, the market capitalization of the Journal Register Company, publisher of the New Haven Register and hundreds of smaller papers, has fallen more than 99 percent since the start of 2007—long before, it’s worth remembering, the credit crisis made business flameouts commonplace. In newspapering, it was the business model itself that fell apart.

Around the same time, the drip of newsroom cuts became a deluge—in all, newspapers lost 13,000 jobs last year—and business news hasn’t been spared. Chris Roush, director of the Carolina Business News Initiative at the University of North Carolina-Chapel Hill, estimates that the number of print business reporters around the country has fallen 25 percent since 2000, to 9,000. Business pages of major regional papers have been especially hard-hit: Since 2004, the Washington Post business staff has lost 30 of its top reporters. The Los Angeles Times has lost at least 15, leaving it with a total of around 50. Yes, we’ve seen the launch of a brand-new TV news channel, Fox Business News—but that’s just another competitor chasing the same shrinking advertising market. And in any case, no one should be under the illusion that TV business news, with its gaze narrowly focused on the gyrations of the stock market concerns, could ever have offered the kind of long-term warnings that would have saved its viewers’ nest eggs. Newspapers were supposed to be different.

When I arrived at the Journal as a staff writer in the law group, in 1996, Dow Jones’ & Co.’s market cap was more than $4 billion. That was back when the paper had a law group, and a Philadelphia bureau, a Pittsburgh bureau, and several Canadian bureaus. It also used to have a cafeteria and a guy who pushed a coffee cart around the floor twice a day. Dow Jones was never a corporate giant, but it was a big, sturdy company, about the same size as many of the Wall Street firms it covered. (Morgan Stanley was about a $5 billion company in the mid-1990s.) You can argue that size doesn’t matter; all I can say is that it made for a confident, freewheeling environment, where the staff was encouraged to take a chance once in a while, maybe even think big. A Journal reporter had swagger.

Penelope Muse Abernathy, a Journal executive until 2006 and now a professor of media economics at Chapel Hill, says the late-1990s economic expansion fed a virtuous cycle in which profits funded good journalism that would attract more readers and profit. “If you were a business reporter, these were the gravy train days,” she says.

Indeed. I rode in black cars, lunched at all the places you read about, and more than once flew across the country to report a 1,200-word story. Every year, Dow Jones dropped an amount equivalent to 15 percent of my gross pay into a pension account, just like that. When I picked up the Journal on my doorstep in the late 1990s, the Monday edition was the size of the Brooklyn phone book.

But not for long.

Dow Jones made particular strategic missteps that need not trouble us here, but those merely left it somewhat more unprepared than other media companies when the tech meltdown ushered in a severe advertising recession, one made permanent by the rise of the Internet. By the time I left at the end of 2004, the newsroom had gone through at least three rounds of layoffs, all white-knuckle, morale-crushing affairs. Benefits were cut to the point that the once-gung-ho staff took to picketing around a giant inflatable rat. Office politics became Byzantine, and productivity demands on the newsroom—more, faster—grew ever more pronounced. Time-consuming investigations were undertaken at the reporter’s own risk: If a lead didn’t pan out—no matter why—it hit your productivity numbers, putting your career in peril. This wasn’t subtle stuff.

The paper, despite occasional bright spots, became rote, formulaic, dull. The Journal‘s weakened condition, financially and journalistically, cleared the way for Rupert Murdoch’s News Corporation to buy it in 2007. Since then, the new owner’s experimentation—more political news, cutting back the copy desk, revamping sections—has not helped the journalism. The paper has done some fine work, but in no sense did it dominate the crisis story as the Journal dominated core financial stories in the past.

The disintegration of the financial media’s own financial underpinnings could not have come at a worse time. Low morale, lost expertise, and constant cutbacks, especially in investigative reporting—these are not conditions that produce an appetite for confrontation and muckraking. In 2002, the Times‘ Gretchen Morgenson won a Pulitzer for beat reporting on Wall Street, beating single-handedly, in the view of some, the entire Journal staff.

Jesse Eisinger, a former financial columnist for the Journal and now a senior writer for Portfolio, says the paper, like business journalism generally, clung to outdated formulas. Wall Street coverage tilted toward personality-driven stories, not deconstructing balance sheets or figuring out risks. Stocks were the focus, when the problems were brewing in derivatives. “We were following the old model,” he says.

but it wasn’t just the media abdicating their watchdog role: Just as financial news outlets were weakening, regulators were also abandoning the field, leaving business reporters starved of the investigative leads they rely on. Back in the 1980s, a great deal of tough Wall Street coverage was driven by the aggressive work of prosecutors and the Securities and Exchange Commission ( sec ). But then came the Clinton-era push toward deregulation that reached its extremes during the Bush administration as the federal government unceremoniously pulled the finance cops off the beat. For a time, Eliot Spitzer filled the void with his aggressive prosecution of Wall Street misdeeds, but for the most part, covering financial corruption without regulators was like trying to clap with one hand.

Take the Federal Trade Commission. In 2002, the agency announced a then-record $240 million predatory lending settlement involving Citigroup’s giant subprime units, and covering no fewer than 2 million customers. Since then the ftc has brought no major consumer lending cases. Zero. The last such case brought by the Office of the Comptroller of the Currency, against Providian National Bank, came in 2000.

The haplessness of the sec under Chairman Christopher Cox is now widely recognized as a major contributor to the collapse. But the commission’s passivity also hamstrung Wall Street reporters: It is worth remembering that prior to the Enron, WorldCom, Adelphia, and Tyco scandals earlier this decade, the sec had already opened formal investigations into each doomed company—forcing disclosures that tipped off investors, yes, but also providing road maps and official cover to the financial press. (The problems at Enron, a special case, were first uncovered by a short seller, who tipped off reporters.)

Contrast that with the most recent disasters: Bear Stearns, Lehman Brothers, aig , Fannie Mae, and Freddie Mac had all collapsed before the sec had even launched an investigation. The spectacle of Lehman employees carrying out boxes of records—on television!—was too much for Jonathan Weil, a Bloomberg columnist who is known for breaking an early Enron story in 2000 while at the Journal. In a column last September, he wrote “Is there anybody left in the government with a pulse? Where’s the yellow police tape? How about a cease-and-desist order to prevent document destruction? Can anyone give me a good reason why Lehman offices shouldn’t be treated as a crime scene now?”

But the regulatory absence only goes so far as an excuse for the press, says Michael Hudson, who began reporting on subprimes in the 1990s at the Roanoke Times and joined the Journal in 2006. He’s now with the Center for Responsible Lending. “It’s true the federal regulators disappeared,” Hudson says. “But there were lots of state regulators who were going after this in a big way, lots of people on the ground, lawyers, consumer advocates, scholars, who saw what was happening, and the press didn’t give them much attention.”

in may 1990, the Wall Street Journal published “The Reckoning,” a devastating, 7,000-word account by Susan Faludi, then a staff writer, of the human toll wrought by the leveraged buyout of the Safeway grocery chain. It is safe to say that that piece, which tied the Safeway lbo to workers’ suicides, heart attacks, and more, would never be proposed, let alone published, today.

Faludi’s article was distinguished by more than its scope and length. It also took on a practice that at the time was at the very heart of Wall Street’s business model, not to mention one of the preeminent firms of the era, Kohlberg Kravis Roberts & Co. It then expanded the story’s scope to take into account the social costs of high finance. Similarly, the Journal‘s Alix Freedman took on the tobacco industry at the height of its power in 1996, when she won a Pulitzer for stories exposing how ammonia additives heighten nicotine’s potency.

By contrast, in the past few years, business-news outlets, increasingly burdened financially, less confident editorially, competing ever more fiercely among themselves, torn by the tradeoff between access and scrutiny, have slowly given away their sense of perspective. The result was an insiders’ conversation—journalism that, while well executed on Wall Street’s terms, in the end missed the point. There have been exceptions—a preliminary list would include Shawn Tully at Fortune, John Hechinger and others at the Journal, Mara Der Hovanesian at BusinessWeek, Diana Henriques and others at the New York Times, and Scott Reckard at the LA Times. But to this day, and even after the collapse, the most complete accounts of the mortgage mess have been provided not by the mainstream business press, but by This American Life‘s “Giant Pool of Money,” and Chain of Blame, a book published last year by reporters for the Orange County Register and National Mortgage News.

Over the past decade, business news has become ever more inward looking, more incremental, and more specialized. In covering Merrill Lynch, for instance, news outlets focused on Stan O’Neal’s hard-charging style, but entirely from a perspective of whether it would help Merrill shareholders. A Fortune headline from 2004 read, “Stan O’Neal may be the toughest—some say the most ruthless— ceo in America. Merrill Lynch couldn’t be luckier to have him.” There was no exploration, in Fortune or elsewhere, of Merrill’s huge push into subprimes until after O’Neal was ousted in 2007.

Increasingly, business coverage has addressed its audience as investors rather than citizens, a subtle but powerful shift in perspective that has led to some curious choices. The Journal, for example, at times seemed to strain to find someone other than Wall Street to blame for the mortgage mess: A December 2007 story announced that borrower fraud “goes a long way toward explaining why mortgage defaults and foreclosures are rocking financial institutions,” though no such evidence exists. Another Journal story last March accused “about half”of foreclosed-upon borrowers of trashing their homes. The source for the “half” bit: a PR firm working for real estate clients. Forbes, meanwhile, in a misbegotten investigation last March of Martin Eakes, the head of the Center for Responsible Lending and one of the few heroes of the subprime mess, suggested Eakes had fought to ban abusive lending in order to help the tiny nonprofit credit union he runs. Seriously.

Competition has only exacerbated this narrowing of vision. Mergers-and-acquisition coverage rose from its place as one beat among many to a full-fledged obsession generating multiple stand-alone sections and publications. But no matter how titillating, deal stories are of limited relevance to most readers, and dependent entirely on the good graces of Wall Street sources. The rise of M&A coverage represents the triumph of Wall Street insiderism. It is the opposite of Faludi’s vision. Significantly, M&A has become a business-press career launching pad: Andrew Ross Sorkin, who writes the Times‘ DealBook column, and former Wall Street Journal M&A reporter Nik Deogun are among the field’s superstars.

Another insider obsession is outsize personalities in the corner office: Coverage of Citigroup produced reams of profiles of its influential former chief, Sandy Weill, his successor, Chuck Prince, and his protégé-turned-rival, Jaime Dimon, but precious little about Citigroup’s role in bringing subprime lending from the mortgage industry’s margins into the mainstream. It was left to Hudson, then freelancing for the 3,000-circulation Southern Exposure, to tell that story (and win a Polk Award).

Personality profiles, critical as they may be, are comfortably within the narrowing business-press discourse. Plus they’re a lot easier, and less risky, than investigations—and it’s that part of business journalism that has been allowed to wither, says Katie Benner, a Fortune writer. “It’s much easier to write a story saying something is a bubble than saying it’s a fraud,” she notes. “If business-news organizations want to be taken seriously, they need to invest in investigative journalism.” Needless to say, chances for that look slim right now—but it is more than just a question of resources. Predatory lending happened in plain sight; it didn’t take a muckraker to see what was wrong. Yet business journalism kept its blinders on, played it safe, fixated on stock market concerns, and allowed its BS detector to atrophy just when it was needed most.

Sure, there has been, and will be, excellent retrospective work—similar to the Journal‘s 2002 look back on the Enron-WorldCom-Tyco period, which won a Pulitzer, but in my view was akin to kicking the wreckage after the plane had crashed. This kind of “explanatory” reporting is by definition too late. It is a lower form of journalism than probing coverage before the fact, which is the hardest to do but in the end what readers—investors, citizens—really need. Who will blow the whistle on the next disaster in the making? Where’s the next subprime mess? Barring a major reordering of resources and priorities, don’t count on the business media to find out. “The press were kind of prisoners of respectability,” Hudson says. “With exceptions, they really want official sources; they want official approval; they don’t want to be too out front. They do a good job after the fact, but not beforehand, when it counts.”