the audit

Audit Notes: Pogue Problems, Wall Street Arrest, Mortgage Assets Crashing Again

June 27, 2011

Jim Romenesko scoops that a PR newsletter is selling $159 tickets to watch David Pogue say what pitches he likes best. It won’t discuss how much or even whether Pogue was paid, but it’s surely a nifty amount.

So Forbes‘s Jeff Bercovici asks “Will the NY Times Give David Pogue Another Pass on Ethics?”, noting that the Times code of conduct specifically says you can’t do that kind of thing:

It is an inherent conflict for a journalist to perform public relations work, paid or unpaid. Staff members may not counsel individuals or organizations on how to deal successfully with the news media….

They should not take part in public relations workshops that charge admission or imply privileged access to the press, or participate in surveys asking their opinion of an organization’s media relations or public image.


The paper has responded to Pogue’s previous misdemeanors with something less than the zero-tolerance rigidity it has shown other writers who’ve made similar missteps. For instance, after Pogue gave a paid speech at a Consumer Electronics Association trade show, the Times “reminded [him] of the policy provisions barring acceptance of speaking fees or travel expenses from all but educational or other non-profit organizations that do not have lobbying or political activity as a major focus.” But the paper also took care to note that Pogue was not on assignment for the Times when he gave the speech. It’s worth noting that the prohibition against giving public relations advice applies to “journalists” — a designation that applies to freelancers like Pogue as well as full-time staffers.

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Indeed. But let me push back on this:

With more than 1.3 million Twitter followers, Pogue is a one-man brand whose massive following makes him all but indispensable to the Times.

The Times could dump Pogue overboard tomorrow and not miss too many beats. I’m guessing that since the two top business sections in the country have star personal-tech columnists, that the platforms are far more powerful than the individuals.

— Apparently there is a way to get the law to come down hard on a Wall Street executive. The Wall Street Journal:

A former Citigroup Inc. employee was arrested and charged with allegedly embezzling more than $19 million from the bank in “the ultimate inside job,” federal prosecutors said on Monday.

Gary Foster, who worked in Citigroup’s internal finance department, allegedly wired about $19.2 million in a series of transactions from the bank’s corporate accounts to his personal account at a unit of J.P. Morgan Chase & Co. between May 2009 and December 2010, according to a criminal complaint unsealed on Monday.

Defraud customers all you want, but don’t steal directly from the bank, dude!

— Whatever happened to all those toxic mortgage assets? The Fed tried to partially reinflate the bubble to boost these asset prices, but the Journal reports that they’re crashing again:

Banks and investors that had just bought mortgage bonds from the Fed found themselves sitting on potential losses, forcing them to pivot. They scrambled to protect their holdings by making bearish bets on the ABX, and an index known as the CMBX that tracks commercial mortgage-backed securities, buying credit-default swaps that would pay out if bonds defaulted. The trades accelerated declines in both indexes and pushed down prices of many mortgage securities.

In late May, French-Belgian bank Dexia SA said it would sell off $8.5 billion in U.S. residential mortgage bonds to clean up its books, raising concerns of more supply hitting the market. The Fed held another mortgage bond auction in early June, but sold only half the securities it offered up. By then, the ABX had plunged to 47 cents on the dollar, down 20% from April, and even corporate high-yield “junk” bonds were losing value.

“It definitely felt like contagion,” said Sean Dobson, CEO of Amherst Holdings LLC, a broker-dealer that specializes in mortgage debt. Mr. Dobson says many mortgage bonds were “grossly overvalued” earlier in the year and prices are now more reflective of the bonds’ actual values given the absence of a housing recovery.

There’s some critical information missing here: How big the remnants of this market still is, and thus how dangerous it is to the financial system.

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 Follow him on Twitter at @ryanchittum.