By actually meeting and listening to people in New York I learnt much about how important the rating agencies were to the financial crisis, and how little has since changed in their world
What is it that distinguishes an academic from a school teacher? For me the defining feature is that we create knowledge. That can be by reinterpreting a text or, as I generally prefer, by going out into the world and talking to people to find out what’s going on, then coming back and thinking about this systematically. Like most political economists I spent my early education reading books, The Economist and newspapers. But the truly exciting part of my academic career began when I did fieldwork for the first time. When I say fieldwork I mean going somewhere, looking at things, soaking up the atmosphere and talking to people. I first acquired a flavour of this by reading Lewis Anthony Dexter’s Elite and Specialized Interviewing, first published in 1970. Dexter taught me how to approach people and get them to tell me things they wouldn’t normally.
There is a lot of myth-making in academia about fieldwork. Many new to the activity seem to start out with the idea that closed-ended questions and a very specific agenda will elicit good usable data from interview subjects. This might seem sensible in surveys, but it doesn’t make any sense when talking to bankers and politicians, or indeed any other educated decision-making individual. It might help those new to fieldwork to abandon the objective of getting ‘answers’ to their questions, and instead embrace simply finding out how things work – at least as far as participants are concerned. That’s a hard thing for a lot of academics to do.
It’s with this background and approach to fieldwork that I went to New York last December. This time I didn’t go to the Wall Street financial district as I have in the past. Given the difficulties since 2007 the rating companies have ‘circled the wagons’ and are more closed to outsiders than ever. Instead, I spent my time in midtown Manhattan where a lot of start-ups and consultancies are located. These were the people I wanted to talk to: the ex-rating agency officials, the former bankers, people who had gotten out of the ‘big money’ and were now operating somewhere on the fringes of the financial system.
These people are attractive because they don’t want to sell me an image of the rating system and banking. It’s true, they are often quite cynical people, but their experience is precious. My knowledge of their business environment helps me make the meetings interesting and fruitful for them too. I know I need to abandon academic jargon and avoid telling them what their business is and how it works. This is instead what we need to discover together. When this works well, we do.
New York is a great place to do fieldwork, of course. The subway system helps and several million people crammed into a small space means that interesting things are everywhere and there isn’t the gap between, say, Mayfair and Canary Wharf. The American business culture is also more verbal and less secretive than London, and this helps a great deal too.
For the first time in more than 20 years of going to New York I made use of the fabled Rose Main Reading Room at the New York Public Library at Bryant Park. What a wonderful facility this is, especially when compared to using a hotel room or a crowded coffee shop as a base for fieldwork. I could read and think and listen to my interviews with all the facilities at hand and for free. The New York Public Library at Bryant Park also has a meeting room available. I did one of my interviews in this room and, apart from the presence of a modern telephone, it looked like it was unchanged from the 1880s. The interview was one of the best ever.
What did I discover on this trip? I came away with a much better sense of the roots of the financial innovation behind the global financial crisis. The people I talked to agreed that the agencies were there at the creation of this innovation and not the spectators they would have you believe. It was clear that the agencies are a much bigger part of the story about financial change than I thought possible. Part of this of course was an account of the rise of individual careers and particular groups within the agencies. According to my interviewees, the agencies should be understood to have created structured finance to a great degree.
The other thing that came across very strongly was the sense that things were back to normal in the rating world. Too many people in too many spheres had too much to gain by keeping things as they are. The only thing that might upset this was an unexpected legal reversal. This latter finding is very much what I had previously concluded myself, but my subjects talked about how the culture within the agencies is, in their view, unchanged by events since 2007. I didn’t anticipate this and it does say a lot about how institutions react to threatening events. Denial is cheap in the absence of a smoking gun.
I’m looking forward to going back to New York this coming September when I will do another round of fieldwork in the city. This time, I will read in advance a lot of documents the people interviewed in December pointed me towards. So I’ll be able to develop deeper relationships with them as I will meet many of them again, as well as new people. While my interest is in creating social science, that doesn’t mean I adopt a combative or closed approach. Fieldwork is a human activity that requires some of the same social skills we bring to the rest of our lives. It’s exciting and stressful, hard work if you do it well, listen and let the other person open up. It questions your assumptions, poses new puzzles and broadens your view.