Editors from major dailies on both coasts wrote to say I blasted with too wide a blunderbuss last week in wondering why it was left to a small periodical to reveal how Sandy Weill built Citigroup on a foundation of subprime sludge.
We press critics learn early to dread the polite but firm notes that begin: “Perhaps you are unaware…”
Perhaps you are unaware of the L.A. Times’s aggressive coverage of Ameriquest Mortgage Co. beginning in early 2005 — long before others got on to the subprime mess.
That came last week from John Corrigan, a deputy business editor at the L.A. Times.
Other notes are just, um, firm. Some I would describe as “spirited.”
Almost all signed correspondence, though, performs a valuable service beyond the obvious one of personally humiliating me, my employers, and my parents in front of thousands. For one thing, they call attention to and allow me to redistribute work I usually like anyway. They also provide an opportunity to clarify what The Audit is trying to do, thereby creating a teaching moment.
Third, and most important, all comers appear to agree with me on the basic principle: the business press can and should be more and unapologetically aggressive in exposing bad corporate behavior. If The Audit can create a consensus on that point, I, like Abraham Lincoln, the Great Emancipator himself, will endure all the grossly unfair, offensive, and hurtful attacks on myself and personal habits.
Jim Schachter, a former New York Times business editor and current deputy editor of the Times magazine, notes correctly that I missed work by Pat McGeehan and Rich Oppel in 2000 that was right on the mark in exposing Associates First Capital for the corrupt organization that it was, just as Citi was buying it and Wall Street was cheering.
I have no quarrel with the notion that the business press should be more aggressive, more ambitious and more brave. But I think you’ve picked a poor example on which to build that case.
The timely 3,700-word story  pointed out that Associates faced more than 700 private lawsuits, had been fined by Georgia authorities, was the subject of legislative scrutiny in North Carolina and elsewhere, and was under investigation by the Justice Department, the Federal Trade Commission, and the North Carolina attorney general.
The story noted that Citi was fully aware of Associates’s problems, but promised to fix them.
These include eliminating loans with large ”balloon” payments; starting a pilot program to have branch offices ”refer up” customers with good credit ratings into less-expensive conventional loans; limiting prepayment penalties to the first three years of a loan; and limiting the amount of certain up-front fees to 9 percent of the loan value.
The story said that Charles O. Prince, then chief administrative officer, now CEO, was on hand to reassure community groups in Durham:
‘I am absolutely confident we would change any practice in any part of our company to make absolutely sure that our reputation remains intact.’
It was a nice of Citi to limit “certain up-front fees” for subprime customers to a mere nine points, which is like throwing a drowning person a shot put. Now that’s living richly.
As it turns out, though, Citi didn’t change Associates’ practices, or at least not enough; that’s why the FTC lowered the boom two years later, and Citi was forced to settle for a record penalty.
I wonder, by the way, how that pilot program to “refer up” customers turned out? Maybe they meant to “reefer” up customers with some decent weed, so they wouldn’t be so upset when, after the merger, a CitiFinancial manager threatens to send someone with an “arrest warrant” to tell a customer’s boss she was a “deadbeat.”
(I’m not sure when corporations got police powers, but maybe in the Patriot Act somewhere. I’m half waiting for the Washington Post’s Dana Priest to break the story of a Blackwater-run subprime debtors’ prison at Guantanamo, and for the WSJ editorial putting it in context. )
But, to be fair, Associate executives, the Times story notes, used to curse at borrowers’ children  so, it cannot be said that Citi did not improve things.