My point is that anyone who really wanted to know about the mortgage market would have done well to read the Times in recent months. This thought, for instance, came in early March:

‘The problems are far broader than subprime,’ said Josh Rosner, a managing director at Graham-Fisher in New York and an expert on mortgage securities. Mr. Rosner says he believes that, absent a huge jump in home prices, investors will soon recognize that credit quality problems have also begun to seep into ‘the upper tranches’ of the loan market.

I’m not saying others didn’t write about it.

Bethany McLean flagged credit-rating conflicts in Fortune back in April.[1]

Forbes made a good call on Countrywide in 2004:

The Art of Unhatched-Chicken Accounting; Mortgage firms’ dubious assumptions” Elizabeth MacDonald 15 March 2004

Just before it made a bad call on Countrywide.

Fastest-Growing Big Companies: Countrywide Branches Out Beyond Mortgages, April 16, 2004

Eisinger’s piece in the latest Portfolio moves the ball forward by showing just how entangled rated and rater became, by reporting that the agencies actually help “structure,” or write the terms of, the securities they are rating, through what the agencies called an “iterative process.”

I like the headline: “Overrated: The subprime-mortgage meltdown could—finally—end the credit-ratings racket”

And much credit must go to Business Week (also owned, as it happens, by McGraw-Hill) which took a hard look when it counted:

When Home Buying By the Poor Backfires; For many families, a house can be a bad investment By Peter Coy 1 November 2004

And this one two years ago:

HOUSING THE MORTGAGE TRAP; Lenders are cranking out an ever-growing array of financing schemes and lowering standards to keep the boom going.
By Dean Foust, with Peter Coy in New York, Sarah Lacy in San Mateo, Rishi Chatwal in Atlanta.
27 June 2005

The best, I thought, was the work of Business Week reporter Mara Der Hovanesian, who wrote last year, among other things, about abusive mortgage-industry lending practices. Other business publications are only beginning to catch up.

The ‘Foreclosure Factories’ Vise; The predatory tactics of some mortgage servicers are squeezing homeowners

The December 25, 2006, story described the Rimstad family of Minnetonka, Minnesota, who refinanced their house in 2004 to replace a furnace and pay for a daughter’s wedding, then saw monthly mortgage payment leap as their adjustable mortgage jumped three full percentage points, or, as these things are measured on Wall Street, 300 basis points.

On Dec. 5, Option One Mortgage Corp., a Kansas City (Mo.)-based unit of H&R Block Inc. (HRB), foreclosed because the Rimstads owed more than $18,000 in late charges and attorney’s fees, on top of their past-due payments. After 24 years under the same roof, the Rimstads face an uncertain future. “I don’t know what will happen to us,” says Randy, 57. “We don’t have any place to go.” Option One says it can’t comment on the specific amount owed, but that it has been working with the Rimstads and will continue to “explore options toward a solution.”

H&R Block. Who knew? They seemed so friendly. And the broadening graph:

Millions of other families in the U.S. could soon find themselves in the same dire straits. Some $1.2 trillion in adjustable mortgages will shift to higher rates in 2006 and 2007, more than half of which are to borrowers with less-than-perfect credit, or subprime borrowers, like the Rimstads.

That’s $1.2 trillion, with a “t,” in adjustable mortgages, issued when rates were at historic lows and could only go in one direction. Anybody out there regulating this system?

But nothing beats sustained, drumbeat coverage from a daily newspaper—even if it reads a bit, um, dryly at times. The Times did that. Good for it.

The business press performs a useful role when it allows sophisticated reporters to get into the weeds of complex financial situations, question industry assumptions, point out conflicts, and report back warnings. Not all of these stories are for the general reader. That’s why there’s a business page. Many should be targeted at equally sophisticated top decisions-makers—regulators overseeing the industry, money managers buying its products, and top executives edging further out on the risk curve—to provide the information they need to make decisions.

Among other benefits, this kind of journalism obviates the need for authoritative “explanatory” pieces about how the unfortunate crash just happened and how warnings signals were available for anyone bothering to look.

Dropping The Ball
How the credit-rating agencies got in the middle of the subprime-lending crisis. And why it could be getting worse.
2 April 2007

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Dean Starkman Dean Starkman runs The Audit, CJR's business section, and is the author of The Watchdog That Didn't Bark: The Financial Crisis and the Disappearance of Investigative Journalism (Columbia University Press, January 2014). Follow Dean on Twitter: @deanstarkman.