A Credit to Gretchen Morgenson of The New York Times for something she declined to take credit for herself.
Morgenson’s reported Tuesday that a Senate subcommittee will examine the extent to which mortgage lenders have extended their sleazeball tactics even into bankrucpty court.
As the mortgage crisis has spread, an army of law firms, loan servicers and foreclosure management companies has developed a highly profitable business by assessing legal fees and other charges on imperiled borrowers, calculating what they owe and drawing up the documents required to remove them from their homes.
What Morgenson doesn’t say is that Morgenson herself, in story after story, drew Congress’s attention to the issue by digging up and linking together U.S. Trustee investigations and bankruptcy court decisions around the country.
Like a watchdog sinking its teeth into a burglar’s thigh, she gets hold of a great story and won’t let go (until the federales rally a posse to take over). See articles just in the last six months like: “Dubious Fees Hit Borrowers In Foreclosures,” “Foreclosure Charges By Lender Investigated,” “Countrywide Subpoenaed By Illinois,” “Lender Tells Judge It ‘Recreated’ Letters,” “U.S. Seeks Sanctions Against Lender,” “The Foreclosure Machine” (with Jonathan D. Glater), and “Piling On: Borrowers Buried By Fees.”
The Audit can only tip its green eyeshade.
A WSJ tale worthy of Dickens
A Credit to The Wall Street Journal for a harrowing front-page piece by Barbara Martinez on how hospitals are requiring extremely ill patients to pay before they’ll treat them. Like $105,000 in cash from a chemo patient whose insurance the hospital, M.D. Anderson in Houston, wouldn’t take.
The scenes in this story are harrowing and seem hard to believe, even in the disaster that is our healthcare system. Martinez also deftly whacks the hospital industry’s argument that it’s members are defending themselves against a surge in unpaid bills by taking a look at M.D. Anderson’s balance sheet and finding that it is:
among the most profitable hospitals in the U.S. Last year, it posted net income of $310 million, bringing the total value of its cash, investments and endowments to $1.88 billion. M.D. Anderson paid its president, John Mendelsohn, $1.18 million last year.
It’s a first-rate story.
A Debit to The Wall Street Journal for succumbing to the sugar high provided by last week’s big candy merger.
Tuesday’s headline sets the article’s exuberant tone, announcing “Mars’s Takeover of Wrigley Creates Global Powerhouse.” And the lavish illustrations for the above-the-fold front-page story do nothing to damp it.
Deals are imporant, but the Journal’s emphasis is
so so out of whack. This story would have been played on A3 not so long ago, and deals were no less important then. This slide toward Wall Street-centrism needs some brakes or middle class readers are going to start to wonder, even more than they do now, exactly whom the business press is talking to. And it’s not just the Journal.
Fortune misses one
A Debit to Fortune for a piece on Citigroup that underplayed the institution’s leading role in making subprime lending a mainstream practice. Carol J. Loomis, a financial press legend, offers us some interesting insight into obstacles to running Citigroup, but here presents the bank as just one misguided lender among others in the subprime crisis.
Loomis tells us:
The reasons for Citi’s debacle have been cataloged in the press. Like many of its competitors, the company drank the Kool-Aid of subprimes.
But, Citigroup didn’t just drink the Kool-Aid—it brewed the pitcher and opened the biggest stand on the block. It almost singlehandledly brought subprime from the fringe into the financial-services mainstream, a point made way back in 2003 by reporter Mike Hudson in his piece “Citigroup, Wall Street and the Fleecing of the South” in
Southern Exposure and discussed by us last October. This is no fine point on Citigroup but the heart of the matter. Loomis’s perspective reflects a broader business-press blindspot on the erstwhile world’s largest bank.
A Credit to Jonathan Weil for his Bloomberg column that provides a bit of sanity and—just as important—coherence to the debate over how to improve accounting rules. One of his main targets is the accounting rule for which we Debited the Journal last week for giving skimpy space to in its otherwise good report.
Weil explains that a company can classify securities in three ways, with varying effects on its bottom line. But in one, a company can assert that certain assets aren’t for sale, allowing it to avoid updating their value to the latest prices. Weil’s common sense recommendation: treat them all the same, and count the change in value toward each quarter’s earnings.
This kind of spotlight is crucial as these accounting shadows are where companies’ misdeeds proliferate—especially in times like these.