TA: How has the press done in its job over the last decade or so—you’d know the timeframe better than me—since the gears that led to this crisis started turning? How has the press done overall in connecting the dots and showing the whole picture?

MH: One of the key questions is the timeframe. Because there have been columns and essays about how the press has done covering the crisis and they tend to talk about things that were done in 2007 and 2008. Which is important—it’s an important function of the press to react to a crisis after it’s happened or while in the middle of it—but the problem is that the causes go back many years. Writing about bad mortgages in 2007, it was too late to stop the crisis.

We really needed more in-depth reporting and more exhaustive reporting back in the mid-to-late 90’s and early 2000’s through 2003-2004. That’s when the run-up was really happening, and that’s when things could have happened to have stopped or at least softened the blow of what was to come.

I think there was a lot of great reporting. You can even go back to the early 90’s, the Boston Globe did story after story, old-fashioned muckraking pieces, about… Fleet Finance, which was a subprime lender making a lot of questionable, abusive loans in Massachusetts and Georgia and elsewhere.

“Primetime” did a pretty hard hitting piece on Ford Motor Company and their subprime subsidiary which was called The Associates Financial Services. I helped a bit with that. To some degree the impetus for it was some reporting I had done on the Associates in the mid-90s.

TV news magazines I think did a pretty good job on these kinds of things in the 90’s before they decided that the only—other than 60 Minutes—the only stories worth doing are murder mysteries. The New York Times and “20/20” did a good piece in 2000 about the connection between Lehman Brothers and a small subprime lender that had lots of lawsuits.

There were a lot of good individual stories, but the problem was that they often weren’t followed up on. Sometimes they were followed up by the news organizations that did them, but you just can’t have that much impact, even if you’re The New York Times or the Washington Post if it’s like a one-shot story and you’re the only one doing it. Other people have to jump on and look at the story, too, and look at other angles.

For example, when Scott Reckard and I did the reporting for the LA Times on Ameriquest, which was the largest subprime lender, there wasn’t a lot of followup… from other publications or to look at other subprime lenders to say is this an isolated case, is this a single company gone bad or is the market as a whole?

TA: So those were dots that somebody should have been able to connect?

MH: Had you done that you would’ve seen that essentially if you went back ten or twelve years, every single company that had risen to the number-one slot, in terms of subprime-mortgage lending volume, had a big blowup where they had to go out of business or had to pay huge settlements for abusive lending. Household, Ameriquest, The Associates, Citi Financial. Those were the ones who were the dominant players in the late 90s/early 2000’s, and they all got in trouble.

Ultimately, you didn’t need access to the CEOs or the CFOs to find out about what was happening in the subprime market. Having access to them might have actually hurt the search. They either don’t know or have an incentive not to tell what’s going on. The story was out there to be done. Talk to ex-employees, look at borrower lawsuits. There is a lot of information about what kinds of loans are put into these securities pools. That’s disclosed in SEC filings. Documentation was there but the problem was you’re not going find it looking around at a high level. You have to look at a mid-level or lower level especially. The way Scott Reckard and I found that Ameriquest story was talking to loan officers.

TA: Newspapers and television are geared toward middle class and upper-middle-class readers, so was subprime just not on their radar?

MH: It’s true. I think part of the problem is that the coverage of business is basically aimed at covering issues that are important to investors. It can be small investors, average folks who are investing in bond funds or 401ks, but it’s geared toward the interest of investors and often not to the interests of consumers—or at least investors trump consumers when you’re trying to decide how to do a story or where to put resources as a news organization.

TA: The problem here is that you can’t do stories about investing in a vaccum without a—I hate that word—but a “holistic” view of the market and the economy which includes the people who are being lent to and are buying the products, right?

MH: What’s interesting with banking regulators, of course, their number-one priority is supposed to be safety and soundness. But the profitability of the company seems to be (the regulators’) number-one priority as opposed to, say, how you treat your customers or whether your customers are getting a good deal.

These companies were making a lot of money making these dicey loans. In the short term that seems to be a good thing for safety and soundness, but in the long run it actually is not. The boomerang comes back around and actually destroyed lots and lots of banks around the country.