Editor & Publisher: Newspaper Biz Editors Defend Mortgage Crisis Coverage. Did the growing mortgage credit crisis, which took a huge turn with last week’s collapse of Bear Stearns, get enough early coverage from newspapers? Top business editors at several of the nation’s major papers say yes, although a few admit some of the more complicated elements may not have been broken out enough for readers.

What tripe. The newspaper industry almost totally failed to do its job, and the public got screwed once again.

Citing a story here and there, as several editors do in the E&P piece, is not evidence of newspapers doing their job. It’s quite the opposite.

When an economic catastrophe of this sort — and entirely predicable one — is building, journalists are failing to do their jobs when they don’t harp on it.

As I said in a previous posting, newspapers and broadcasters were raking in billions in advertising from the real estate and banking industries as this bubble inflated. I do not believe this is a coincidence. I also don’t believe it was deliberate malfeasance; but you just don’t see lots of tough coverage in media of the people and companies paying the bills.

Many if not most papers have special weekly real estate pages or sections where you would find little hint of the potential for trouble. I know I looked for it in the papers I read. That’s where the discussion belonged — as well, of course, as Page One — not solely in the occasional business page stories. Hundreds of references to bubbles, most in the past year and not when there was a chance to slow down that train, were dwarfed by comparison to the buying advice that dominated coverage of real estate overall.

Oh, sure, there were extremely infrequent stories containing warnings in a few publications — and occasional quotes from skeptics in the prices-just-keep-rising stories that overwhelmingly dominated the coverage. But the reality is that journalists mostly didn’t have a clue, or didn’t want to have a clue. I don’t know which is worse.

Some bloggers, and some economists, did shout warnings. They were ignored, or worse, insulted by wishful thinkers and (I suspect) people who stood to gain from the continuing bubble.

Again, from a previous post, here are some questions the media all but ignored until too late:

Where were the stories we should have been seeing, noting that “buyers” — a word that is ludicrous in context –were running headlong toward a financial cliff? What happened to the coverage of a housing market that fewer and fewer people could afford to enter except with no-interest or no-down-payment loans, where home prices were so far out of sync with the economy that there was no precedent for such imbalance?

Where were the stories pointing out that the secondary (and far beyond) mortgage markets were salting hugely risky debt all through the American economy? You think your bank or pension fund doesn’t have some of this garbage somewhere in its books? Think again.

The media also bungled by not fingering the makers of this bubble apart from foolish “buyers” who proved to be such suckers. This boom was fueled by people who knew it couldn’t last: brokers, bankers and, above all, Wall Street’s ever-clever wizards who risk other people’s money for gigantic fees.

This is another journalistic scandal. It’s not quite on the order of the bended-knee, pre-war coverage — stenography of government officials’ lies and deceptions — that helped steer America into the Iraq war, but only because it’s not killing people in large numbers.

It’s a massive enough scandal, though. There’s plenty of pain left in this deflation, possibly including an outright tanking of the economy.

The journalism craft should take a long, hard look at what it’s failed to do, yet again, in the housing bubble. It has failed to warn — as loudly and incessanty as it did in promoting the housing bubble — that a financial crunch was on the way.

There’s plenty of blame to go around in this mess. The finger-pointing has barely begun. But when it gets going for real, I hope that journalists who do some of that pointing will at least look in a mirror.

11 thoughts on “Housing Bubble Coverage: Defending the Indefensible

  1. Not only do I agree with you 100 percent, I had sent an e-mail to Strupp telling him exactly what you say. Here it is:

    “That column about newspapers warning about the subpriime crash was absolute drivel.
    “I can remember the yards of copy written about new developments and real estate sections filled with puff pieces promoting house buying, with no hint of any risks involved with these investments. For the few stories you cite, what about those that quoted the National Association of Realtors about how this was the right time to buy a house, and that house prices have never declined. Remember how we were told house prices were supposed to be “sticky” and that when there was a downturn, the prices would stick rather than fall precipitously. Where were the investigative pieces about how low-income people were being ripped off by subprime mortgages? Both the New York Times and Wall Street Journal you cite ran endless stories about high prices for New York apartments, with appropriate pictures of the luxury amenities that came with them. In my lifetime, newspapers have missed the S&L excess of the 1990’s, and they dropped the ball on this one, too. And what about the culpability of Congress in this? Where are the investigative pieces of House and Senate banking legislation that opened the door to easy lending, no-document loans and giving mortgages to people with lousy credit reports — including illegal aliens working day work construction jobs? From what I’ve heard on CSpan, Sen. Jon Kyl has reams of information documenting how Congress contributed to the collapse now happening, but no reporters seem interested.”
    Strupp responded:
    “Thanks for the note, please pass on any articles you cited.”
    Well, I don’t have access to newspaper databanks, and newspapers don’t archive their real estate sections, so some of the choicest flackery is no longer available online.

  2. “Dwarfed by comparison” … “extremely infrequent stories” … “occasional quotes” … Strong words. Also entirely subjective. And unquantifiable.

    I could say in response, oh I dunno, that the press was “startlingly prescient” … “on the case” … “ahead of the curve.” And you would rightly challenge me to back up those assertions.

    So, Dan: Back it up. Right now we have your word, based on your own reading of whatever it is you read, that the press “failed”. If you’re going to damn an industry, damn it in detail.

  3. I thought you might be interested in “Brokered Dreams,” a series of articles that The Columbus Dispatch published in September 2005 about the foreclosure crisis. We’ve published several dozen follow-up stories since then. Our coverage wasn’t perfect, I’m sure, but our readers had plenty of warning about subprime mortgages, aggressive homebuilders and other ingredients in the mortgage meltdown.

    Here’s a link: http://dispatch.com/live/contentbe/dispatch/2005/09/21/broker.html

    Doug Haddix
    Projects Editor
    The Columbus Dispatch

  4. Did you, by chance, read any of the coverage in the Sarasota Herald-Tribune as the bubble grew? The paper featured several prominent stories about the risks. Several realtors were convinced the newspaper was conspiring against them to sink the market.

  5. In suburban Boston, local blogs were asking these types of questions in 2005:


    The Boston Globe, Herald, and the local tabs’ real estate coverage mostly consisted of marketing for realtors (“Home of the week”), etc. There were no investigations, and not even many interviews with ordinary people who were concerned about high prices.

  6. Doug, it sounds as though you were ahead of your peers.

    Cory, the Sarasota paper had “several” stories? How did that number compare with the boosterish coverage? (I’m not a bit surprised to hear that the real estate folks were going bonkers.)

  7. Dan,
    Many great points — but where are the facts? A comparison of real estate-warning vs. booster stories in just one publication would begin to give actual evidence for this latest round of media bubblemeisters, a la S &L, Enron/Worldcom, 1990s dotcom, 1929, and tulips from Holland, etc. etc. JS

  8. When the graduating class of medill school of journalism heard thier commencement speakers speech, he said go forth graduates and above all else remember ” THE PURPOSE OF JOURNALISM IS TO MAKE A PROFIT”
    Wake up you silly tinkerbell pollyannas, thinking journalism is not a BUSINESS.
    sadly we are not in a social welfare state yet

  9. I commend any reporter with no ulterior motive that tells the facts, and that is why we have the internet, we can tell the facts and fact check for ourselves.
    Sadly when the herd of irrationally entusiastic buyers are all running off a cliff into foreclosure, led by silly agents and profiteers, the best a truth teller can do is avoid being stampeded by the running herd, pay your own insurance and pray.

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