Legal Muse

Insert witty tagline here…

For those of you who’ve read Ender’s Game

with 6 comments

Would the Last Honest Reporter Please Turn On the Lights?
By Orson Scott Card

Editor’s note: Orson Scott Card is a Democrat and a newspaper columnist, and in this opinion piece he takes on both while lamenting the current state of journalism.

An open letter to the local daily paper — almost every local daily paper in America:

I remember reading All the President’s Men and thinking: That’s journalism.  You do what it takes to get the truth and you lay it before the public, because the public has a right to know.

This housing crisis didn’t come out of nowhere.  It was not a vague emanation of the evil Bush administration.

It was a direct result of the political decision, back in the late 1990s, to loosen the rules of lending so that home loans would be more accessible to poor people.  Fannie Mae and Freddie Mac were authorized to approve risky loans.

What is a risky loan?  It’s a loan that the recipient is likely not to be able to repay.

The goal of this rule change was to help the poor — which especially would help members of minority groups.  But how does it help these people to give them a loan that they can’t repay?  They get into a house, yes, but when they can’t make the payments, they lose the house — along with their credit rating.

They end up worse off than before.

This was completely foreseeable and in fact many people did foresee it.  One political party, in Congress and in the executive branch, tried repeatedly to tighten up the rules.  The other party blocked every such attempt and tried to loosen them.

Furthermore, Freddie Mac and Fannie Mae were making political contributions to the very members of Congress who were allowing them to make irresponsible loans.  (Though why quasi-federal agencies were allowed to do so baffles me.  It’s as if the Pentagon were allowed to contribute to the political campaigns of Congressmen who support increasing their budget.)

Isn’t there a story here?  Doesn’t journalism require that you who produce our daily paper tell the truth about who brought us to a position where the only way to keep confidence in our economy was a $700 billion bailout?  Aren’t you supposed to follow the money and see which politicians were benefiting personally from the deregulation of mortgage lending?

I have no doubt that if these facts had pointed to the Republican Party or to John McCain as the guilty parties, you would be treating it as a vast scandal.  “Housing-gate,” no doubt.  Or “Fannie-gate.”

Instead, it was Senator Christopher Dodd and Congressman Barney Frank, both Democrats, who denied that there were any problems, who refused Bush administration requests to set up a regulatory agency to watch over Fannie Mae and Freddie Mac, and who were still pushing for these agencies to go even further in promoting sub-prime mortgage loans almost up to the minute they failed.

As Thomas Sowell points out in a TownHall.com essay entitled “Do Facts Matter?” ( http://snipurl.com/457townhall_com] ): “Alan Greenspan warned them four years ago.  So did the Chairman of the Council of Economic Advisers to the President.  So did Bush’s Secretary of the Treasury.”

These are facts.  This financial crisis was completely preventable.  The party that blocked any attempt to prevent it was … the Democratic Party.  The party that tried to prevent it was … the Republican Party.

Yet when Nancy Pelosi accused the Bush administration and Republican deregulation of causing the crisis, you in the press did not hold her to account for her lie.  Instead, you criticized Republicans who took offense at this lie and refused to vote for the bailout!

What?  It’s not the liar, but the victims of the lie who are to blame?

Now let’s follow the money … right to the presidential candidate who is the number-two recipient of campaign contributions from Fannie Mae.

And after Freddie Raines, the CEO of Fannie Mae who made $90 million while running it into the ground, was fired for his incompetence, one presidential candidate’s campaign actually consulted him for advice on housing.

If that presidential candidate had been John McCain, you would have called it a major scandal and we would be getting stories in your paper every day about how incompetent and corrupt he was.

But instead, that candidate was Barack Obama, and so you have buried this story, and when the McCain campaign dared to call Raines an “adviser” to the Obama campaign — because that campaign had sought his advice — you actually let Obama’s people get away with accusing McCain of lying, merely because Raines wasn’t listed as an official adviser to the Obama campaign.

You would never tolerate such weasely nit-picking from a Republican.

If you who produce our local daily paper actually had any principles, you would be pounding this story, because the prosperity of all Americans was put at risk by the foolish, short-sighted, politically selfish, and possibly corrupt actions of leading Democrats, including Obama.

If you who produce our local daily paper had any personal honor, you would find it unbearable to let the American people believe that somehow Republicans were to blame for this crisis.

There are precedents.  Even though President Bush and his administration never said that Iraq sponsored or was linked to 9/11, you could not stand the fact that Americans had that misapprehension — so you pounded us with the fact that there was no such link.  (Along the way, you created the false impression that Bush had lied to them and said that there was a connection.)

If you had any principles, then surely right now, when the American people are set to blame President Bush and John McCain for a crisis they tried to prevent, and are actually shifting to approve of Barack Obama because of a crisis he helped cause, you would be laboring at least as hard to correct that false impression.

Your job, as journalists, is to tell the truth.  That’s what you claim you do, when you accept people’s money to buy or subscribe to your paper.

But right now, you are consenting to or actively promoting a big fat lie — that the housing crisis should somehow be blamed on Bush, McCain, and the Republicans.  You have trained the American people to blame everything bad — even bad weather — on Bush, and they are responding as you have taught them to.

If you had any personal honor, each reporter and editor would be insisting on telling the truth — even if it hurts the election chances of your favorite candidate.

Because that’s what honorable people do.  Honest people tell the truth even when they don’t like the probable consequences.  That’s what honesty means .  That’s how trust is earned.

Barack Obama is just another politician, and not a very wise one.  He has revealed his ignorance and naivete time after time — and you have swept it under the rug, treated it as nothing.

Meanwhile, you have participated in the borking of Sarah Palin, reporting savage attacks on her for the pregnancy of her unmarried daughter — while you ignored the story of John Edwards’s ownadultery for many months.

So I ask you now: Do you have any standards at all?  Do you even know what honesty means?

Is getting people to vote for Barack Obama so important that you will throw away everything that journalism is supposed to stand for?

You might want to remember the way the National Organization of Women threw away their integrity by supporting Bill Clinton despite his well-known pattern of sexual exploitation of powerless women.  Who listens to NOW anymore?  We know they stand for nothing; they have no principles.

That’s where you are right now.

It’s not too late.  You know that if the situation were reversed, and the truth would damage McCain and help Obama, you would be moving heaven and earth to get the true story out there.

If you want to redeem your honor, you will swallow hard and make a list of all the stories you would print if it were McCain who had been getting money from Fannie Mae, McCain whose campaign had consulted with its discredited former CEO, McCain who had voted against tightening its lending practices.

Then you will print them, even though every one of those true stories will point the finger of blame at the reckless Democratic Party, which put our nation’s prosperity at risk so they could feel good about helping the poor, and lay a fair share of the blame at Obama’s door.

You will also tell the truth about John McCain: that he tried, as a Senator, to do what it took to prevent this crisis.  You will tell the truth about President Bush: that his administration tried more than once to get Congress to regulate lending in a responsible way.

This was a Congress-caused crisis, beginning during the Clinton administration, with Democrats leading the way into the crisis and blocking every effort to get out of it in a timely fashion.

If you at our local daily newspaper continue to let Americans believe — and vote as if — President Bush and the Republicans caused the crisis, then you are joining in that lie.

If you do not tell the truth about the Democrats — including Barack Obama — and do so with the same energy you would use if the miscreants were Republicans — then you are not journalists by any standard.

You’re just the public relations machine of the Democratic Party, and it’s time you were all fired and real journalists brought in, so that we can actually have a news paper in our city.

Advertisements

Written by DMN

October 23, 2008 at 1:56 am

Posted in Uncategorized

Tagged with

6 Responses

Subscribe to comments with RSS.

  1. Hear, motherfucking, hear. I think that the situation is a bit more complicated than just Fanny/Freddie, but I do think it is a major part of the issue which for some reason has been mostly ignored, I would guess in large part because there is no clear villian in this story in the way that there is with Wall Street Execs and Oil Big Wigs, and other carpetbagging, robber baron, whatevers.

    Bobby Rose

    October 23, 2008 at 9:27 am

  2. I thought Ender’s Game was a great book. But since when was OSC a journalist?

    Melissa

    October 23, 2008 at 10:00 am

  3. Looks like since 2001.

    openfire06

    October 24, 2008 at 2:07 am

  4. I’ve heard of “Ender’s Game,” but it was never added to my reading list. So like most people of my generation, I turned to Wikipedia for enlightenment. My initial perception of Orson Scott Card is similar to my views on Joe Lieberman. On a trendy note to add the word “hybrid” to every freakin noun, they might be considered to possess hybrid political views. Mr. Card does present an important topic about the quality of journalism these days as we have debated that subject to death before (NY Times & McCain). According to former classmates of mine who are currently pursuing graduate degrees at the Columbia University School of Journalism provided the following insightful thoughts: quality parallels integrity in journalism, content quality is primarily based on subject expertise, conservative or liberal style reporting is irrelevant as long as facts are not manipulated, and like any other industry, journalism is affected by the demand of its content by the readers/viewers.

    As I was listening to “Forever Young” by Alphaville, I developed a sudden urge to share my knowledge about Fannie Mae and Freddie Mac. You could point your fingers toward politicians, like many journalists, for putting pressure on the two F’s to encourage home ownership even amongst the less than credit worthy people, but I want you to consider an economic-based reasoning with less politics. I’ve included as much obvious information as possible in order to maximize the clarity and transparency of the two firms. So, no insults are intended. Here is what I have to offer in confidence as I have done my research on these two firms for my own investing purposes since 1996 when I was a young lad:

    Fannie Mae and Freddie Mac are NOT loan providers of sub-prime loans. It’s crucial to recognize that these two competitive firms participate in the secondary mortgage market if you want to begin to understand the current financial crisis without the plethora of confusing media reports*. These mortgage-backed securities (mbs) market can be complicated for anyone not actively investing in securities (stocks, bonds, commodities, currency, derivatives, etc). In the simplest form of explanation, the participating firms buy massive amounts of mortgages (house/property loans) from lenders (usually banks) and stuff it into a form of security that is divided into individual shares for sale. Or consider that mbs resemble a bond mutual fund, which is a portfolio that contains many types of bonds. Bonds and MBS are debts issued by businesses or government agencies (state & federal). Both securities share similar traits in payout terms of 30 year bonds and 30 year mortgages and other time-dated payouts (termination of a debt). On a monthly basis, dividends are paid to the owners of these securities. At the end of the termination date of the debt, the buyer of the debt is given the full amount invested in the beginning (the initial price of the bond or the title to the house). The other mortgage-related investments are covered bonds (popular in Europe), GNMA trusts, REITs, etc. In terms of success and the security factor (investor confidence), mbs were usually considered more dependable and consistent in return compare to stocks.

    Mbs became immensely popular to investors for two reasons: 1. Alan Greenspan (former federal reserve chairman) kept the federal interest rate low, which encouraged investors seek out better return on investments in the forms of debt other than Treasury bills (gov bonds). 2. Fannie Mae and Freddie Mac implied guarantees on its mbs by guaranteeing all the mortgages (from foreclosures) stuffed into the mbs. These two reasons created a supply & demand phenomenon. Business firms (banks, investment banks, investment firms, investors, non-equity business firms, etc) started actively trading these mbs like any other security, which increased in demand due to its high paying dividends. In order to meet the rising demand for mbs, Fannie Mae and Freddie Mac had to buy more mortgages. This meant that mortgage lenders had to encourage consumers to buy more houses by even offering risky, incentive-laced mortgages. Then the demand went through the roof after investment firms issued mbs, which added competitive pressure on the two F’s. These mbs were traded across the globe and a lot of people made money from the consumers who flipped houses to the top investment bankers and the CEOs of the two F’s. The surprising aspect is that we wouldn’t have a financial crisis if the housing bubble never popped. Why? Any of the foreclosures could be resold for a profit as long as the housing prices continued to rise (sold for higher value than the initial purchased value), thus easily securing the guarantees by the mbs issuers. The next logical question is why did the housing bubble pop? Home builders built more houses to meet the demand of consumers, mortgage lenders, and mbs issuers. The financial market unraveled when traders realized that there were too many houses in the market and the supply and demand equilibrium was out of balance. The other popular question is what about those subprime loans? This is a matter of what came first, the chicken or the egg (too many houses or risky loans).

    If your head is still spinning, imagine Fannie Mae is baking a huge apple pie by purchasing apples from various apple suppliers across the country. The entire pie is too expensive to sell on the market, so it was divided into many slices and sold at an affordable price. The buyers resold the pie slices and the ownership changed many times in the form of trade. In the event that an apple piece went bad, Fannie Mae replaced it with a good piece of an apple. Fannie Mae did not expect a lot of apple pieces to go bad due to its purchasing standard – Every apple had to meet certain standard of quality prior to buying the apples for the big pie (the government pressured the bakers to lower the standards and the bakers wanted to sell more pies). Unfortunately, there were way too many apple pieces that went bad because the apple suppliers sold good apples and potentially bad apples to Fannie Mae. The apple growers planted too many apple trees that flooded the market with too many apples and the apple prices significantly dropped. Now nobody trusts each other and the few benefits left in life consists of obtaining a free pint of beer from a diehard Republican brother of Bill, and lucky for us liberals, Bill is an inconsistent shooter if he ever has the urge to exercise his NRA rights.

    I eventually came to a conclusion to refrain from investing in the two firms not based on a divine insider information, but it had to do with the following:

    1. Lack of transparency. Fannie Mae was started by the government, in order to increase confidence in the housing market during the Great Depression. Then President Lyndon Johnson released the government leash on the firm, but it was still a government sponsored enterprise (wtf does that mean?). Then Freddie Mac was born in the 70s. Now there are two huge firms with the government’s hand in their pockets. It’s imperative that I know what I am going to invest in and those two firms never gave me that warm fuzzy feeling.

    2. Morals. Knowing that any investment can flop, I couldn’t imagine meddling with someone’s house for my own monetary interests. For most Americans, a house is where memories are made and cherished forever.

    3. Luck.

    *Confusing media reports are correlated to the level of expertise on the subject of journalism. Ex., reporters flocked to the White House press conference on wake of the financial crisis. Specifically, the reporters wanted to obtain the White House reasoning on the need for the massive $700 billion bailout in the hopes of melting the frozen credit market. Needless to say, there was a lot of skepticism in the room. Dana Perino, the White House spokeswoman asked if anyone knew the current Libor (London interbank offered rate), which is the most widely used rate involved in short-term borrowing between business firms. Only one reporter raised a hand, who was a Bloomberg reporter (financial media firm). So, it’s not surprising that the majority of the public who have read the news about the financial crisis from various news avenues are still confused. [Keep in mind that this source was obtained via Bloomberg podcast. I asked my friends at Columbia and they did not know the current Libor either. haha, journalists.]

    itk

    October 24, 2008 at 8:39 am

  5. Actually, the housing issue is just a beginning… The new global marketplace and the mobility of jobs to overseas players, the trade imbalance ongoing, fuel prices, and real ecological issues are lined up as new dominoes in the game of finance – and life. The western world is already struggling to hold its place… if our economy can not come back in strength – with meaningful productivity and innovation, there will be a reshuffling and new players may come out on top. We will not be making the rules anymore – and we have been spoiled into a belief that we have time, that we are too smart to fail, and that we can just ride it out. Geographic distances do not protect us anymore. Tax bases are drying up become of faltering incomes, system corruption and greed, and shared irresponsibility across the nation; Meanwhile we wait clueless for the real bubble to burst – the bubble that suggests we will remain on top, but has the ambitous – hungry – competent world lining up to change it all. Buckle up – the ride is just getting interesting.

    j

    October 28, 2008 at 2:51 am

  6. I’d like to comment on one sentence in itk’s comment. I disagree with calling OSC’s political views “hybrid”. I would even shy away from bipartisan. I think the best word here is nonpartisan, which is that he appears to form his own opinions and support whichever side of a given issue he thinks is best. In most situations, he believes what the Democrats believe, and so calls himself a Democrat. I don’t see the support of John McCain or the trashing of the American media a divergence or an inclusion of Republican ideas or ideals. I think he just doesn’t follow the party line for it’s own sake, which is extremely unusual in politics these days.

    Dave

    October 28, 2008 at 12:49 pm


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: