But it’s also the idea that there seems to be more of an appetite and more of an emphasis on investigating government or government-connected agencies. It doesn’t mean that there isn’t investigative reporting done on private companies, but there seems to be a higher bar.
I don’t know if you saw the recent article by Chris Roush in (the American Journalism Review) about how he thinks the press did an excellent job on these types of issues. It focuses on the great reporting that was done on Fannie and Freddie. There wasgreat reporting, but that doesn’t necessarily mean it was reporting that warned us about the coming mortgage meltdown or warned us about the true cause of the coming mortgage meltdown which was the alternative mortgage lending by private lenders bankrolled by Wall Street—the subprime lenders and the Alt-A lenders—who were pushing these risky products.
The Orange Country Register wrote in November that “Fannie and Freddie… were bit players in this market. Together they bought about 3 percent of all subprime loans issued from 2004 through 2007, most of that in 2007 alone.”
So Fannie bought a very negligible amount and most of it after the cake was already baked. At best Fannie and Freddie slightly exacerbated the problem, but certainly never drove the problem.
Fannie and Freddie in the end were sort of forced by the market to go along, but they were not driving it. And I think one of reasons why there was a lot of good reporting done on Fannie and Freddie is that they were sort of quasi-governmental institutions.
TA: What should the press do now? Has there been enough emphasis on the fact that Wall Street ultimately drove this, which you wrote about in the Lehman leder last summer?
MH: All the ink spilled on Fannie and Freddie and the Community Reinvestment Act—things that had little to no impact on the crisis, and then balance that on what’s been written on Wall Street’s role and it doesn’t look pretty. I think there does need to be more attention to that. To understand where do we go from here and what happened. There’s a battle going on right now to define what really happened. And there’s certain people pushing this idea that it was the government that caused this, the idea that it was the Community Reinvestment Act. If you read that story, written by Ronald Campbell in The Orange County Register, he found that nearly $3 out of every $4 made came from lenders that were exempt from the Community Reinvestment Act.
So we’re in a battle now to define what happened. There’s a lot of rhetoric being thrown about and a lot of people talking in ideological terms and trying to shift blame, but really what needs to be done is more reporting, to dig deep—and connecting the dots. The real numbers of what kinds of loans were made and who made them and how they were bankrolled and how they were funded and what’s the best way to prevent it from happening again.
One thing I think it’s important to remember is the predatory lenders have been with us for a long time in one form or another. Over the years they’ve morphed in response to investigations and governmentt reforms and new regulations, but they always find a way to morph into a new form.
Regulators and the media and policymakers need to be forward-thinking; they can’t just be fighting the last battle. What’s the next scam?





There WAS a lot of reporting on this, at least in the last three years. People who brag about not reading newspapers are probably the same ones crying "why didn't the press warn us"?
But this quote is just golden:
"MH: ... "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."
If "small investors" with 401ks count as investors, we have the key to the puzzle:
most consumers ARE investors! An article in the Economist on financial literacy classes shows more than a few homeless mothers have 401ks from previous jobs!
Maybe readers are their own worst enemies - you're hurting my 401k! You didn't warn me as a consumer!
Of course, it's in the investor's best interest to know their money is funding companies with shabby consumer practices.
But as you go down the line from upper-middle class to middle class readers, they are more consumer-minded. Sadly, by having to cater to investors over consumers, middle class readers stop reading and subscribing, find little in the paper that concerns them.
Wonder how circulation at Consumer Reports is doing?
Posted by AJF on Fri 12 Dec 2008 at 08:48 PM