The piece goes on to describe the Wall Street connection in some detail: “No Wall Street investment bank had a bigger share of that reviving 1999 [subprime] market than Lehman Brothers, Wall Street’s fourth-largest brokerage house.”

This story and others were based on groundbreaking litigation in California that, importantly, would hold a Wall Street firm responsible for the practices of its lender-clients. Had that principle stood up (an Orange County jury found for the borrowers in 2003 but the award against Lehman, $5 million, was small), there would have been no mortgage crisis. The Los Angeles Times, led by E. Scott Reckard, also dogged the litigation, recognizing the journalism opportunity for what it was.

John Hechinger of The Wall Street Journal also wrote fine warning stories, including one about how brand-name lenders were convincing the poor to refinance zero-percent loans from the government and Habitat for Humanity (!?) with rates that reset to the mid-teens and higher (“Best Interests: How Big Lenders Sell a Pricier Refinancing to Poor Homeowners—People Give Up Low Rates to Pay Off Other Debts . . .” 12/7/01). The dishonor roll is here:

Some of the nation’s biggest subprime lenders have refinanced zero-interest and low-interest loans from Habitat, including Countrywide, units of Citigroup Inc., Household International Inc., Ameriquest Mortgage Co. and a unit of tax giant h&r Block Inc.

Meanwhile, the Journal’s Jess Bravin and Paul Beckett painted a devastating portrait of a compromised Comptroller of the Currency (“Friendly Watchdog: Federal Regulator Often Helps Banks Fighting Consumers—Dependent on Lenders’ Fees, OCC Takes Their Side Against Local, State Laws” 1/28/02). And Forbes did a beat-down on Household (“Home Wrecker,” 9/2/02).

What is important to remember about the period around the turn of the decade—and this is not a knock on the press—is that predatory lending was high on the public’s agenda, mostly in response to marauding behavior of old-line subprime lenders like Associates, First Alliance, Conseco Finance, Household, etc., who at the time were being joined by the new generation of subprimates—Ameriquest, New Century, et al. From the mid-nineties to the early ’00s, foreclosures began to jump in urban areas around the country, rising half again in Chicago’s Cook County, doubling in Detroit’s Wayne County, Newark’s Essex County, and Pittsburgh’s Allegheny County, tripling in Cleveland’s Cuyahoga County, according to American Nightmare: Predatory Lending and the Foreclosure of the American Dream, a muckraking book by Richard Lord published in 2005, based on his reporting in the Pittsburgh City Paper on this early subprime boomlet.

Between 1999 and 2004, more than half the states, both red (North Carolina, 1999; South Carolina, 2004) and blue (California, 2001; New York, 2003), passed anti-predatory-lending laws. Georgia touched off a firestorm in 2002 when it sought to hold Wall Street bundlers and holders of mortgage-backed securities responsible for mortgages that were fraudulently conceived. Would that such a measure had survived. We forget now, but beginning in 2004 Michigan and forty-nine other states battled the U.S. Comptroller of the Currency and the banking industry (and The Wall Street Journal’s editorial page) for the right to examine the books of Wachovia’s mortgage unit, a fight the Supreme Court decided in Wachovia’s favor in 2007—about a year before it cratered. Iowa Attorney General Tom Miller and Roy Cooper, his counterpart in North Carolina, made predatory lending the centerpiece of their tenures (see: “They Warned Us About the Mortgage Crisis,” BW, 10/9/08) while in New York Eliot Spitzer gave grandstanding a good name in trying to bring attention to the issue (“Spitzer’s Ghost,”, 10/14/08).

This isn’t about identifying which journalist or economist was “prescient,” the business-press parlor game du jour. What’s important is that forthright press coverage and uncompromised regulation combined to create a virtuous cycle of reform.

Citigroup, remember, was forced to sign a $240 million settlement with the Federal Trade Commission covering two million customers. This is marketing deception on a mass scale, revealed and policed. A coalition of states forced an even bigger settlement, for $484 million, on Household. This was in 2002. It wasn’t perfect, but it was working.

Alas, any fair reading of the record will show the business press subsequently lost its taste for predatory-lending investigations and developed a case of collective amnesia about Wall Street’s connection to subprime, rediscovering it only after the fact.

There are a number of explanations (though no excuses) for this. First and foremost, was the abdication of regulatory responsibility at the federal level. Uncompromised regulation and great journalism go hand-in-hand. But when such regulation disappears, journalistic responsibilities only increase. What is important to understand first is that this press failure did occur. Readers needn’t be bullied into believing they missed relevant independent press investigations of Countrywide, New Century, IndyMac, Citigroup, Bear Stearns, Lehman Brothers, or Merrill Lynch. Check the sheet; they aren’t there.

Dean Starkman , CJR's Kingsford Capital Fellow, runs The Audit,'s business desk. Megan McGinley, a CJR intern, and Elinore Longobardi, an Audit staff writer, provided research. This story and the two following were supported with a grant from the Investigative Fund of The Nation Institute, for which we are deeply grateful.