Dan Gillmor

Housing Bubble Coverage: Defending the Indefensible

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.