The Pittman Way

A financial reporter who combined data and attitude

Q: Tell me how your cops background plays into what you’re doing now.

A: You end up with a big BS detector as a cops reporter because the cops lie to you, the victims lie to you, the people helping the victims lie to you. And you’ve got to sort through, and there will be a story that seems a certain way, and it just won’t be—and you know it. That’s what this is about.

So Mark Pittman died last week.

The reason this is important is not just that Pittman was a great reporter, though he was that. “One of the great financial journalists of our time,” Joe Stiglitz says. That is true. He did do great stories. He won the Loeb; he had a Pulitzer coming one of these days. That was inevitable. Financial journalism lost a leading practitioner at the worst possible time.

I lost a friend. I realize my writing ability is not up to the job of expressing how I actually feel, but he was a great guy.

For a sense of the man and the reporter, all this you can learn in the obit manfully written on deadline by his pal, Bob Ivry. What a rotten assignment.

But for me, the thing that needs to be remembered, especially by financial journalists and the people who rely on them, is that Pittman represented an attitude, a feeling. It was the attitude that drove the journalism and, for me, defined the man. Take this quote from Ryan Chittum’s Audit Interview with Pittman from last February, which has suddenly become valuable historical record. I’ll add some emphasis:

It’s also that we realize this is a defining moment for business journalism and for Wall Street. I think that this organization, this news department, was built for this crisis. We’ve got more tools than anybody. We’ve got the will. We have the assets to go after this in a huge way. Everybody believes that in this room.

Hopefully, we will be able to inform the people enough to know how badly we’re getting screwed (laughs). We need to know how to prevent it from happening again, and we need to know who did it. There’s renewed energy on this front because we’ve staffed up the people who cover banks, the securities firms. We have a lot more people going at real estate and a bunch of different areas that this involves. That was a conscious move from meetings we started having in 2007. We hired people and we moved people from one area to another area.

My favorite part of the quote is probably this one: “(laughs).” It’s sort of, whoops, did I just say that? You get a sense of the joy he took in his work, of being someone lucky enough to be at the center of the financial universe at an inflection point, a time of fevered crisis and near collapse, when many of the financial system’s long-held secrets are laid bare or pushed close—so close—to the surface. Wall Street chieftains scrambling in panic around the New York Fed at all hours; oceans of government cash and credit loosed on financial institutions. And here is Bloomberg, the last financially robust news organization on the planet—it has more bureaus, 135 as of last year, than most news organizations have reporters—flying in people, hiring reporters and editors, getting them cell phones, corporate credit cards, those remarkable Bloomberg terminals, reorganizing desks, turning, slowing turning the organization with the ominous deliberateness of a Death Star, which happens to be a nickname among staffers for Bloomberg’s hyper-modern Lexington Avenue headquarters.

And there was Pittman, manning the con.

“This organization…was built for this crisis…We’ve got the will. We have the assets.”

A few other things to take from that quote: Notice that it is a defining moment not just for Wall Street, but for journalism; it’s not just about them, the bankers, the raters, the regulators, the Fed. It was about us, too. How do we respond?

And though he softened it with a laugh, we should pay Pittman the respect of listening to him when he says the job is to “inform the people enough to know how badly we’re getting screwed,” and also, “we need to know who did it.”

We need to know who did it. This is the attitude of a great cop reporter—albeit one who happens to know more about structured credit than just about anybody else.

This attitude is important to keep in our memory as we enter Crisis Year IV.

Pittman’s attitude informed his stories. His stories shaped the discourse. The discourse shaped the policy. That’s how it’s supposed to work.

We met for drinks a few times, evenings that invariably became long, intense, and absorbing, with Pittman looming over you like some big Kansas drinking bear. He would get a funny, subversive look—cracked smile and crazy eyes darting behind wire-framed glasses—when he was telling tales out of school. These were discussions, believe it or not, about the financial crisis and financial journalism, and after listening to him you couldn’t help but come away with the sense that this was someone who had peered into the Crisis of 2007-2008 and seen it in all its vastness, its all-encompassing awesomeness, the profound badness that had led to it, and the depth and breadth of its reach, from the canyons of Wall Street around the world and back again to the streets of Bedford-Stuyvesant. He just couldn’t believe what he had seen.

Pittman’s stories weren’t about artful writing—Bloomberg’s editorial system isn’t there yet. It was all about the data, massive amounts of it, highly sophisticated, yet wielded with all the subtlety of a two-by-four.

Let’s look at a couple Pittman stories to understand. The reader will see these topics were not picked at random.

A telling one for me was from November 2007, when Hank Paulson as Treasury Secretary was arguing, among other things, against a measure that would make packagers of subprime mortgages liable for damages if loans violate certain minimum standards. For many, Paulson’s warnings created a sense of disconnect. Who was this guy again?

Pittman’s piece explained precisely who he was, the former head of the leading Wall Street firm that had helped create the crisis in the first place.

Nov. 5 (Bloomberg) — Treasury Secretary Henry Paulson says the U.S. is examining the subprime mortgage crisis to ensure that “yesterday’s excesses” aren’t repeated. He could be talking about himself and his former firm, Goldman Sachs Group Inc.

Paulson, 61, doesn’t mention that Goldman still has on the market some $13 billion of almost $37 billion in bonds backed by subprime loans or second mortgages that it created while he was chief executive officer. Those bonds have an average delinquency rate of almost 22 percent, higher than the average of other subprime bonds from the period, according to data compiled by Bloomberg.

Hypocrisy laid bare; it’s simple accountability reporting, albeit done with a high degree of technical skill.

Pittman himself was most proud, I think, of his June 2007 piece that showed how rating agencies were helping to cover up the crisis by refusing to downgrade ratings on toxic securities. I think it was because of the pushback from the named companies he had to overcome.

June 29 (Bloomberg) — Standard & Poor’s, Moody’s Investors Service and Fitch Ratings are masking burgeoning losses in the market for subprime mortgage bonds by failing to cut the credit ratings on about $200 billion of securities backed by home loans.

The highest default rates on home loans in a decade have reduced prices of some bonds backed by mortgages to people with poor or limited credit by more than 50 cents on the dollar and forced New York-based Bear Stearns Cos. to offer $3.2 billion to bail out a money-losing hedge fund. Almost 65 percent of the bonds in indexes that track subprime mortgage debt don’t meet the ratings criteria in place when they were sold, according to data compiled by Bloomberg.

That may just be the beginning. Downgrades by S&P, Moody’s and Fitch would force hundreds of investors to sell holdings, roiling the $800 billion market for securities backed by subprime mortgages and $1 trillion of collateralized debt obligations, the fastest growing part of the financial markets.

Shortly thereafter, downgrades began, the coverup was over, and the markets cratered.

It was not a coincidence that in September 2008 Pittman was only a beat behind Gretchen Morgenson on one of the most important financial stories of the year, the one exposing Goldman and other Wall Street banks as key counterparties to benefit from the bailout of AIG, which was then only two weeks old and, to the public, still utterly unfathomable. Why would the government bail out an insurance company?

The Pittman story—“Goldman, Merrill Collect Billions After Fed’s AIG Bailout Loans”—provided critical support for the Times piece at a time of maximum tension. Both stories have since been vindicated in their essentials, and then some.

But then, Pittman and Morgenson were cut from the same journalistic cloth.

The last thing I’ll point to is the Loeb-winning series, a collaboration that ended with a long rambling account by Ivry—but it had Pittman’s influence all over it—that tries to tie the entire crisis together from the boiler rooms to the I-banks, to the raters, to a broke Icelandic city that invested in junk CDOs to a six-year-old girl who lost her bike during a foreclosure in Dorchester, Massachusetts.

I wrote earlier that it didn’t totally work as a story, but the heart behind it, the spirit, was unmistakable. It’s worth remembering that the series came a full year before the Times’s justly lauded “Reckoning” series.

Mark Pittman was a good man and a great reporter. I will miss him. And we’ll never know what he would have done as he continued to work on the story he predicted he would retire on.

Pittman combined a high level of sophistication about the financial system with the attitude—the bad attitude—of a great cop reporter. Many reporters are sophisticated; a few are passionate. Pittman had the attitude and the data.

It has been said that he is irreplaceable. We can only hope that this is not true.

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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.