Debits and Credits: WSJ’s Fine Subprime Scoop

But debits for early deadlines, a lame service column; WaPo's rose-colored look at the Journal, etc.

A big credit to The Wall Street Journal for its scoop Saturday on what will no doubt be a Story to Watch: Countrywide, that always-on-the-up-and-up home lender, is under investigation by the FBI for securities fraud.

Here’s the major new info, which the Journal buries in the eighth paragraph:

Another potential issue facing the company is whether it has been candid in its accounting for losses. People familiar with the matter said that Countrywide’s losses may be several times greater than it has disclosed.

There are more uh-ohs in the previous paragraph:

Federal investigators are looking at evidence that may indicate widespread fraud in the origination of Countrywide mortgages, said one person with knowledge of the inquiry. If borne out, that could raise questions about whether company executives knew about the prospect that Countrywide’s mortgage securities would suffer many more defaults than predicted in offering documents.

We applaud the WSJ for its excellent reporting here, which forced the Times, FT, Bloomberg and others to play catch-up on Sunday.

Further credit to the Journal for the story packaged with its Countrywide scoop on A3 (which strangely, appears not to be online). We’ll give you the flavor. Here’s the lede:

With home foreclosures sweeping the country and his own company beset by huge losses, Angelo Mozilo, chief executive of mortgage giant Countrywide Financial Corp., finally apologized—for the tone of an email complaining about reimbursement for his wife’s travel expenses… Mr. Mozilo didn’t apologize for his company’s performance or the problems that threaten to put hundreds of thousands of families out of their homes.

There aren’t going to be too many tears shed for Mozilo if the investigation above leads to the Orange One.

We like the Journal’s putting aside stuffy journalism convention and calling a spade a spade.

Out of service

We tend to focus our critical eyes less on the “news you can use” bits of the business press. Service journalism is as service journalism does. But sometimes a column is so goofy we just can’t not mention it.

So it is with the WSJ’s phoned-in Marketplace-front column, “How to Hunt for Jobs As Time Out of Work Drags On and On,” last week. Helpful tips include revamp the resume and get out of the house. Thanks for pointing that out!

Even tiny fixes enhance the document’s appeal, such as an easy-to-read format and plenty of white space. Similarly, “a subtle variation in font choice can sometimes help a résumé stand out from the crowd,” suggests Alex Douzet, a founder of, an employment Web site.

If a font is keeping you from getting a job we think there are deeper problems for your search, which the WSJ acknowledges. We’ll ease up a bit on the column since it does include some interesting numbers about unemployment trends:

About 18.3% of jobless Americans in January had been out of work for at least 27 weeks. The figure far exceeds the 11.1% of those who had gone as long without work when a recession began in March 2001.

But back on the debit side of the ledger, the WSJ plies us with corporate-consultant speak, telling us to pursue the ever-popular “build your personal brand” strategy. “Ask yourself and acquaintances, ‘Why is this product not selling?’ recommends Dave Opton, CEO of ExecuNet, a career and business network in Norwalk, Conn.” Yech.

The content is weak, the anecdotes don’t really work—why is this on B1 of The Wall Street Journal?

Foreclosures are good for economists

Robert J. Samuelson writes the classic “easy for him to say” opinion column
in Newsweek and The Washington Post—he’s against helping homeowners:

The understandable impulse to minimize foreclosures should not be a pretext to prop up the housing market by rescuing too many strapped homeowners. Though cruel, foreclosures and falling home values have the virtue of bringing prices to a level where housing can escape its present stagnation. Helping today’s homeowners makes little sense if it penalizes tomorrow’s homeowners. An unstoppable free-fall of prices seems unlikely. Slumping home construction and sales have left much pent-up demand. What will release that demand are affordable prices.

Foreclosures would help the housing market, huh? That’s a roundabout way of looking at things. Talk about the classic economist’s lost-in-his-textbooks myopia. Is it really better to stand by and let millions lose their homes just so the market can become more efficient more quickly? We’d beg to differ.

And we have a nit to pick with Samuelson on his median-income numbers. When he says “From 2000 to 2006, median family income rose almost 14 percent, to $57,612”, it’s misleading. Real median income (adjusted for inflation) has fallen since the end of 2000. He’s using non-adjusted numbers so he can compare them to housing prices, but it would be nice to note the real decline, something he well knows.

Yesterday’s news today

We’re going a bit afield from our business-journalism purview, but we’ll justify it because it’s in the business-of-journalism category.

A debit to the WSJ’s four-star (final) print edition on Wednesday, which ran big on A1 with the headline, “Clinton Wins Ohio to Battle On,” the morning after the Ohio and Texas primaries. Basically, everyone but WSJ readers who went to sleep at a decent hour knew that Clinton also won the Texas primary.

Richard Honack, the assistant dean and adjunct associate professor of marketing at the Kellogg School of Management at Northwestern University, says in an interesting Q&A with the American Press Institute, people are ahead of the headlines.

The majority of “news” customers are past “what happened”—they want to know “how it happened.” The days of the “Front Page” have been gone for a few years. We live in a “nanosecond” world and newspaper buyers now read the paper for comfort when they have time.

That may be true, but that doesn’t excuse papers for being late on news they ought to have.

If the Journal wants to compete with the Times as the nation’s paper of record on hard, non-business news, it’s going to have to work more like a normal newspaper and move its early deadlines back.

The best of all possible Journals

A debit for The Washington Post’s Panglossian look at the changes at the WSJ since Murdoch’s taken over. The WaPo spins an okay scoop—that the Journal will now have a sports page featuring scores from a News Corp. unit—into a section-front story that strains a bit too much.

The Post says there’s been no “overhaul” of the paper. Sure, there aren’t naked breasts on page three, but long-time readers have noticed that the paper’s front page has been transformed since Murdoch took over in December. Big changes are afoot in the paper’s habit of publishing daily “leders,”—magazine-like stories often weeks or months in the works and with no real connection to news of the day—that used to dominate the page two at a time. Now there are rarely two and sometimes none at all, and the quirky “ahed” feature is barely hanging on (though seemingly always below the fold).

The WSJ’s front page is now not much different from any other front page—that’s a major difference that the Post says “Journal reporters have noticed,” but one that it minimizes.

And the inside of the A section has become much more devoted to political news—with less space devoted to the Journal’s core business and economics coverage.

Those are major changes in content, though it is difficult for outsiders to tell whether they stem from the takeover by Murdoch or the ascension of Marcus Brauchli as managing editor, which happened a few months before. We suspect it’s both.

In any case, the Post is wrong to play down such dramatic changes.

Color us green with boredom

Another “green houses” story with a minor-at-best news hook? That’s a debit.

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Anna Bahney is a Fellow and staff writer for The Audit