Behind Barack’s “Suspicious” Mortgage

Why did the Post run its Obama mortgage story?

What should an editor do when an enterprise piece comes up empty? Do you kill the story? Send it back for more reporting? Bury it inside with a sigh and a “Better luck next time?” What if the story’s about an exceedingly public figure—a presidential candidate, say? Should the newsworthiness of the subject influence your basic news judgment? What’s your move?

Today’s Washington Post goes inside with a report that, in 2005, Barack Obama received a discounted home loan from a Chicago bank (headline: “Obama Got Discount on Home Loan”). Here’s Joe Stephens’ lead:

Shortly after joining the U.S. Senate and while enjoying a surge in income, Barack Obama bought a $1.65 million restored Georgian mansion in an upscale Chicago neighborhood. To finance the purchase, he secured a $1.32 million loan from Northern Trust in Illinois.

The freshman Democratic senator received a discount. He locked in an interest rate of 5.625 percent on the 30-year fixed-rate mortgage, below the average for such loans at the time in Chicago. The loan was unusually large, known in banker lingo as a “super super jumbo.” Obama paid no origination fee or discount points, as some consumers do to reduce their interest rates.

Compared with the average terms offered at the time in Chicago, Obama’s rate could have saved him more than $300 per month.

That’s a savings of $3,600 per year. With that sort of cash, he could buy a Segway!

In light of the recent Countrywide scandal, wherein certain legislators received favorable treatment on some loans, it’s understandable that papers would be want their writers to examine the candidates’ financial transactions. And, after all, the Rezko controversy has clouded Obama’s side yard for months.

But there doesn’t seem to be much of a story here. A United States senator who had recently procured a substantial book deal would seem to be a pretty low default risk; if there were any lingering questions about his creditworthiness, his wife could certainly have guaranteed the loan. What’s more, while the story notes that Obama’s rate was about .375 percent lower than that week’s average rate, it doesn’t compare the rate against those received by similarly creditworthy borrowers.

Near the end of the story, Stephens quotes Northern Trust exec John O’Connell: “Our business model is to service and pursue successful individuals, families and institutions.” But Stephens never answers whether Obama was pursued because he was financially successful or because he was politically successful. That’s the issue here: Did Obama’s political position impact the details of his loan? Stephens leaves that question unsettled, possibly because he doesn’t know the answer. But without an answer, all that’s left are a bunch of weak correlations.

The Post got burned back in 2007 with John Solomon and Lois Romano’s controversial front-pager on John Edwards’s sale of his Georgetown mansion. Post ombudsman Deborah Howell said the badly contextualized story “seemed like a ‘gotcha’ without the gotcha.” Stephens, to his credit, seems to realize that there isn’t much here; he takes a level, sober tone in his story, and basically refrains from unsupported inferences and allegations.

Of course, the “gotcha” here comes from the decision to print the story at all. The fact that Stephens’ story ran in the Washington Post—even discounting the fact that it ran on A3—would lead most readers to initially infer impropriety. Newspapers simply don’t publish positive stories about public figures’ financial histories; as such, any story like Stephens’ is going to have to work extra hard to overcome the assumed negative frame.

In her review of the 2007 Edwards story, Howell noted that “Edwards and other presidential candidates can expect—and deserve—close scrutiny of any financial dealings.” Justifiably true. But what happens if those dealings hold up to scrutiny? Is it news if they do? Personally, I don’t think so—but if you, as an editor, decide that it is, you ought to be obliged to make it very, very clear that nothing unsavory happened; and you ought to make it very, very clear—right up top—what is important enough to make you want to run the piece.

Neither of those things happened here, and the end result was a story that raises more questions than it answers. And the questions have more to do with the Post’s news judgment than they have to do with Barack Obama.

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Justin Peters is editor-at-large of the Columbia Journalism Review.