More insidiously, this is an ongoing crisis not just confined to
markets. It is expected that, once adjustable rate mortgages are
"reset" upwards, two million more families face the foreclosure of
their homes. Their economic pain is being recognized, but too late to
prevent a vast displacement of people who cannot afford to live in
homes they were suckered into purchasing with the promise of
practically free money.
Did this "just happen," appearing one
morning out of blue skies, like a hurricane moving from category 4 to
category 5? Of course not! The signs were there for all who wanted to
see them, and warnings were plentiful even as they were ignored.
Many in the markets were too.
It's
odd how the front page of its widely-read Sunday edition, the one-time
newspaper of record, could splash a story on how the media and the
markets looked the other way as massive deals were being financed by
securities cobbled together from sub-prime loans backed with no assets.
Why were the signs missed, asked the Times?
Unlike the CIA, the Times did not assess its own reporting and its role in all this.
A
few days later the newspaper's business columnist showed that, in fact,
many did know and tried to raise the alarm. It seems to be an example
of the front pages not knowing what the business pages had reported.
He
reminded readers that Ben Bernanke, Chairman of the Federal Reserve
Bank who just pumped billions of dollars in the markets to keep them
liquid and then followed up with a cut in the discount rate, was asked
about these issues two years earlier:
"It came in November 2005,
toward the end of his all-day Senate confirmation hearing, when Senator
Paul Sarbanes brought up the mortgage business. Mr. Sarbanes, the
ranking Democrat on the Banking Committee then, pointed out that the
number of people taking out adjustable-rate mortgages soared in 2004.
'Are you concerned about the potential for a bubble in the housing
market?' the senator asked Mr. Bernanke. 'And specifically, does the
drastic increase in the use of risky financing schemes, including
interest-only and even negative amortization mortgages, concern you?'
Mr.
Bernanke replied that the Fed was reviewing its guidelines for these
loans and planned to issue new ones soon. The guidelines, he added,
'would have on the margin some beneficial effects in reducing
speculative activity in some local markets.' At no point, though, did
Mr. Bernanke suggest that he was concerned."
And what about the
larger media? Where was their concern? Back in the spring of 2006, I
published an article in Nieman Reports, the journalism review published
at Harvard and read by top editors. I specifically lambasted the lack
of reporting on the issue. It was titled, "Investigating the Nation's
Exploding Credit Squeeze."
Its thesis: 'Questions of by whom
and for whom need more and better investigation, as well as a look at
who are the losers and who are the winners.'
The response: tepid.
I
then followed up by organizing a Media For Democracy online-email
campaign (Media For Democracy is an advocacy effort tied to
Mediachannel.org, the media issues website I edit.)
Media For
Democracy members sent tens of thousand of requests to media outlets
urging that the issue be given more coverage. This was well before the
market meltdown. The appeal read in part:
"We are dismayed by
the superficial reporting we have seen on the debt crisis in America.
The press has been asleep at the switch in reporting on this story,
often showing more compassion for wealthy businessmen than abused
consumers.
We believe that our media outlets have a
responsibility to offer more context, background and information about
how this debt crisis occurred and what we can do about it."
What
was the response? Not much. Most responses came in the form of
yada-yada-yada form letters as in, "Thank You For Writing to the Today
Show." Responding to public concerns and suggestions are not high on
the media agenda.
I then made the film IN DEBT WE TRUST: America
Before The Bubble Bursts to try to raise the visibility of the issue.
The film was well reviewed but ignored by the New York Times. I
personally sent copies and letters to leading op-ed writers and
reporters. The result: nary a mention. I have been interviewed
extensively in the alternative press but largely ignored by the
mainstream.
That's not entirely true. CNN and MSNBC did carry
positive articles including one which compared my documentary to
"Carrie," a horror movie. They suggested mine was scarier. Tavis Smiley
had me on; Larry King did not. Oprah has yet to return a call. (And
AOL/truestories is now streaming the film.)
The media has still
not given us an accounting for burying the story. Eventually, on the
Iraq War, some media outlets admitted they practiced poor journalism,
even as many of their mea-culpas did not basically change their
narratives.
Why not on this issue?
Other media critics
have been scathing about the dereliction of duty that is so obvious
here. Dean Starkman in the Columbia Journalism Review was contemptuous:
"What's
wrong? Why ask us? This kind of after-the-fact financial reporting I
equate with a National Transportation Safety Board
investigation?kicking through smoldering wreckage after the plane has
already crashed. There's nothing intrinsically wrong with this kind of
reporting. It just feels a little late. Also, I always find it
disingenuous to talk about napping watchdogs, as in the headline above,
when the Journal and the rest of the business press themselves slept on
the job and had to scramble to catch up to the corporate scandals
earlier in the decade."
Now the story is being covered but it
is often the wrong story. The reporting tends to focus far more on
panicky markets than victims of predatory lending. It seems like only a
few critics like Jim Hightower are telling it like it is:
"At
its core, this is a classically simple story of banker greed and
outright sleaze. And the astonishing part is that nearly all of the
rank injustice perpetrated by today's money changers is considered
legal and is practiced by supposedly reputable financial firms."
Some years back, a hamburger chain challenged its competitors with commercials asking, "where's the beef?"
My
questions today to media colleagues, including the progressive
blogosphere, are where's the pick-up, where's the follow-up, where's
the outrage?
Writings 
That "why didn't we know" question is back. Again! It was asked about 911 in connection with our government ignoring warning after warning about likely terrorist attacks.
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