Corrigan, from the L.A. Times writes:

In a series of stories by staff writer E. Scott Reckard and contributor Mike Hudson beginning in Feb. 2005, the L.A. Times shone a light on the ‘boiler room’ culture in some Ameriquest loan offices, the use of fraudulent appraisals to win loan approvals, and the fact that Ameriquest’s ads rarely mentioned that it was a ‘subprime’ lender — even though at the time it was the nation’s largest. We subsequently learned that our coverage was closely followed by regulators who ultimately negotiated a $325 million settlement from Ameriquest. You can find those stories at latimes.com.

That was indeed a remarkable story.
 (I happened to have seen that one, but missed the other 29 that Reckard did on the defunct Ameriquest and its founder, Ambassador Arnall.

Since the topic today is Citigroup, I’ll limit myself to quoting only two paragraphs describing a typical day around an Ameriquest office in suburban Minneapolis:

Slugging down Red Bull caffeine drinks, sales agents would work the phones hour after hour, he said, trying to turn cold calls into lucrative ‘subprime’ mortgages — high-cost loans made to people with spotty credit.

The demands were relentless: One manager prowled the aisles between desks like ‘a little Hitler,’ Bomchill (an ex-Ameriquest staffer) said, hounding agents to make more calls and push more loans, bragging that he hired and fired people so fast that one worker would be cleaning out his desk as his replacement came through the door.

The “Proud Sponsor of the American Dream,” ladies and gentlemen. A David Mamet-meets-Hunter Thompson dream, but a dream.

Someone else wrote to point me to the remarkable work by the Times’s Diana B. Henriques, whose byline I will not fail to notice in the future, including on this 6,200-word jackhammer written with the great Lowell Bergman on the crooked, Wall Street-abetted practices of First Alliance Mortgage Co., also now defunct.

MORTGAGED LIVES: A special report.
Profiting From Fine Print With Wall Street’s Help [4]


A couple of points here:

First, the people who wrote me are proud of their colleagues’ work, and that’s a good thing. Obviously, I don’t mean to slight that work; quite the opposite. I also understand the feeling of doing the hard work that others avoid, and then having it ignored.

Second, the two Timeses did hit hard at the subprime issue in general.

Schachter says:

I think that our paper’s coverage on this issue since then — by Gretchen Morgenson and many others — has lived up to the traditional standard of afflicting the comfortable and comforting the afflicted.

Of course, I already agree on that. (Gotcha! Boo-yah!)

L.A., you’re right. You were wrongfully ignored. On the other hand, this isn’t the Pomona Journalism Review, so lay off.

But third, and let’s face it, Hudson’s piece in Southern Exposure was groundbreaking in that it really did reveal not only that Citi bought a bad company in 2000, but that its roots—a significant part of it earnings, a case could be made, its very essence—lay in the subprime sector.

I suspect that’s why the story won a Polk Award.

That it was left to Southern Exposure to do that story, given the volume of Citi coverage, is, I’m sorry, troubling.

Also, given the amount of regulatory activity around Associates in 2000 and subprime lending in general afterwards, especially in 2002, it is worth asking whether it is more notable that these newspapers did the stories or that others did not?

Fourth, why is there an Audit?

One thing is for sure: it’s not here to attack the business press. The Audit, as an arm of CJR, is a friend of the press in general, the business press in particular, and of business reporters, who are on the front lines, most of all. And that’s how it will be as long as I’m running it.

The purpose of The Audit, obviously, is to make the business press do what I want. But that just seems to be what many but not all working journalists want, including the late Forbes editor, James Walker Michaels, as described Sunday by Morgenson:

He refused to play the access journalism game. (Better to have your nose pressed firmly against the glass than to be a guest of the people you report about.) He believed in congratulating true business achievers and slamming crooks and flops. What better way to celebrate capitalism, he argued, and keep it safe from the me-firsters who could wreck it?

If the business press doesn’t want to do that, then at least we can have a discussion about it.

So, I have a view on what constitutes good and bad reporting, and I often question editorial priorities. But that’s only because I think I have a healthy respect for the importance of what the business press does—especially in these times.

My generation of reporters—I’m forty-eight, (though still spry!)—came of age as President Reagan was winning the deregulation debate, ushering in an era in which corporate power has been ascendant and government regulators in retreat. People will argue about the merits of this philosophical shift and whether it’s about to end (and I hope it is), but not, I think, the fact of it.

And so, business reporting has faced extra responsibilities, even as its financial base has been about as stable as one of those whirling amusement park rides were the bottom drops out and everyone is pinned to the side, screaming.

These days, financial journalists need to, yes, provide timely information to shareholders, keep readers up to date on new technology, fashion, autos, food, and the like, write boardroom-level features, break news on deals, all of that.

But to remain relevant to readers, they also need to point out the good actors and go after the bad, no matter how big or mainstream. To me, that’s the main job; everything else is ancillary.

Basically, business reporters, to survive, must do what they want to do anyway.