Wednesday, June 27, 2007

Need For Page 1 Sub-Prime Mortgage Crisis Coverage

The newspapers ought to be giving the sub-prime mortgage crisis, the rising rate of foreclosures, the continuing fall in housing prices, rising inventories and their shadow on both the banking industry, stock prices and the hedge funds, even more attention than they are at the moment. I believe the story has reached a dimension that should move it regularly to Page 1.

Sub-prime mortgage problems are the frequent subject of stories in virtually every Business section these days, but, really in terms of their importance, they deserve more prominence. A list of 50 stories, the L.A. Times Business section has done either directly on or bearing on the mortgage crisis shows only one of those stories appeared on Page 1, although the paper has had a package of stories under the title, "The Mortgage Meltdown,." many by the able E. Scott Reckard.

The overall context is clear. Not for the first time in recent years (the savings and loan crisis comes to mind), the major financial institutions of the U.S. government have failed to enforce discipline over the financial markets and allowed an unhealthy and unjust economic situation to arise.

It is unhealthy, because it is beginning to effect stock prices in vital sectors and even general consumer economic confidence, which has been falling. It is unjust, because it impacts lower-income Americans more than any.

It was unfair to federal regulators to allow a situation to arise where they were offered adjustable mortgages at an artifically low rate for awhile and were not sufficiently warned that they would rise in a fairly short time and force many of them out of their homes.

But the crisis is beginning to affect more prosperous Americans too, because they cannot sell their homes and move around as they wish. I currently have several college classmates in that category, locked in where they are, when they wanted to move to a better home, or closer to their grandchildren.

Now, we see, every day, new stories, often buried back in the Business sections of the papers. The L.A. Times had two yesterday. One from the Associated Press said that the inventory glut is rising while home sales drop. The second "from Times wire services," said stock gains have evaporated on mortgage worries.

I presume not so many people in the Business section of the Times have taken the buyout as to force the paper to run wires, rather than its own writers, on such significant stories. But this may only reflect a few occasions. The paper has run a number of stories, not only under the byline of Reckard, but also by David Streitfeld, Kim Christensen, John O'Dell, Annette Haddad, Jonathen Peterson, P.J. Huffstetter and Tom Petruno.

Beyond their work, however, I still feel, there needs to be further indepth examination of how this crisis arose, of the failings in both the financial markets and the government that led to it. One fruitful subject of inquiry, beyond the federal regulators, would be Wall Street, which tries to run herd over the newspapers. Why doesn't it do the same with the finance industry?

If the Business section is not regularly given Page 1 space, then Metro and National reporters could be assigned to the reporting. The Times has done this with other important economic stories, such as the war of insurance initiatives in 1988 and the subsequent fallout in theCalifornia insurance industry. I remember this, because I was assigned, and covered that story for several years.

One problem in the past was that Business all too often simply was not tough enough on the economic institutions it was covering. The Business reporters, by and large, would not ask the tough questions that had to be asked. They gave practically no attention to Harvey Rosenfield and other consumer advocates who were pushing reform. This important Business story therefore had to be covered outside Business.

But this may simply have reflected a need for more willpower by the Business editors. Had they cracked the whip, their reporters could have done it. They were certainly qualified.

Right now, the Business editors should lobby for better space. Based on statements by Business editor Davan Maharaj, he and his assistants realize they are in the midst of an important story, too important to be left to the wire services and the inside pages. Now, in addition to continuing coverage in Business, Times editor James O'Shea should also move selected stories out front.

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The New York Times editorial Tuesday on the death threats against the author Salman Rushdie had a couple of good points to make that I think are particularly well worth quoting.

"Mr. Rushdie's new honor (the knighthood bestowed on him by Queen Elizabeth II) raises the same question now that his work raised when Ayatollah Khomeini pronounced a fatwa against him in 1989," the NYT editorial remarks. "Do we choose to live in a world that honors writers or in a world that kills them?"

"The imaginative range of (Rushdie's) work, its complexity and its ability to test the limits of what we know and believe entitle him to the respect and the honors he has earned. Yet in some parts of the world it would earn him assassination. You cannot judge a society only by the way it treats writers. But you can be certain that if a society treats writers badly, it treats ordinary people no better."

That certainly applies to Iran, where the NYT reported in the last week that a street crackdown proceeds against those who choose to dress a little differently or otherwise act a little differently than the crazed fundamentalist Muslim clerics want them to.




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