The Journal, which I said yesterday was writing as if it was now inside Hank Paulson’s head, at least attributes its scoop today, though it continues to channel him on his plan to reduce mortgage rates to 4.5 percent:
Treasury views this plan as potentially halting the slide in home prices by enabling borrowers to afford bigger loans, thus increasing demand and pushing up home values. The lower interest rates would be available only to borrowers who are buying a home, not those refinancing a mortgage.
Its story asks no questions about whether the plan would work, leaving one token graph way down toward the bottom for “skeptics” that don’t really say anything:
The Treasury plan is similar to ideas previously floated by the National Association of Realtors and the lobby group for home builders, but has skeptics. “I don’t think it’s the answer to the foreclosure problem because that problem is a combination of negative equity with unemployment,” said Mark Zandi, chief economist of Moody’s Economy.com.
Well, okay. What about the fact that the whole point of the plan is to artificially boost housing prices by throwing out cheap money, which is exactly what caused the boom and bust in the first place? Haven’t we learned that lesson?
But the bigger problem here is that The Wall Street Journal has shown little critical distance from the Treasury Department over several months. Its pieces, too often read like something out of one of the primitive Communist government press organs, like TASS or Xinhua, from the Cold War.
“The Supreme Soviet plans to increase left boot production in order to maintain parity with right boot production.”
Here’s more channeling of Paulson from a separate story on Obama and Treasury:
Treasury officials have grown frustrated with the Obama transition team’s unwillingness to engage in specifics. Mr. Paulson has to consult with the Obama team on any big moves, in particular on plans for how the next $350 billion should be used. While Treasury has been in frequent contact with the Obama team, there is uncertainty about what it wants to do with that next batch of money. Many within Treasury believe the next administration is trying to keep its distance in an effort not to be painted as endorsing any of the Bush administration’s plans…
Obama transition aides have pushed back on what they see as undue pressure from the Bush administration. “We’ve had three press conferences on the economy. The president-elect delivered his radio address on it. He met with the governors [Tuesday]. He’s talking [Wednesday] too, but the one-president-at-a-time rule applies here,” said one Obama aide, after acknowledging that the Bush White House is pressing for help on the TARP.
Notice how the WSJ suddenly starts attributing facts when it talks about Obama. Apparently the paper is not inside the president-elect’s head!
The Times is better at raising questions in its story, which is only tangentially about the Treasury-plan news:
Any government efforts to jump-start the housing market have a number of obstacles, the biggest being borrowers’ worries that the economic downturn will affect them. Meanwhile the best interest rates will go only to borrowers in sound financial shape. And even if the efforts go as planned, they may not help the most distressed homeowners.
The Journal is the most important financial publication in the world. The Treasury is the most important government agency in the world (right now). I’ll bet you Treasury can put out its own press releases just fine. What readers really need now is some rigorous skepticism of government plans, not stenography of its inner thoughts.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.