Newspapers may no longer be necessary, but reporters are. As proof, check out Eric Nalder‘s two-parter (so far) on the Wall Street meltdown.
Sticking his nose in from the other side of the continent, the Seattle Post-Intelligencer reporter has started pulling back the covers on the cozy bedfellows — financiers, pols, federal officials, and lobbyists — who got us into this mess.
Not that they aren’t the usual suspects. But Nalder scores points by getting specific right away about technical stuff, and he makes it readable. On October 10, he focused on the pols and lobbyists; the next day, he zoomed in on the regulators.
Business Week‘s Robert Berner and Brian Grow are also doing detailed work on unraveling the crisis. In their October 9 piece, “They Warned Us About the Mortgage Crisis,” though, they get bogged down in a threadless story — even after their editors gave them a subhead that summed up their work: “State whistleblowers tried to curtail greedy lending — and were thwarted by the Bush Administration and the financial industry.”
The Seattle P-I‘s Nalder does a better job untangling the esoteric financial instruments that have poked us in the eye. In his first piece, “Politicians, lobbyists shielded financiers: Lack of liability laws fueled firms’ avarice,” he gets past the generalities quickly:
While Wall Street financiers stoked today’s financial meltdown with explosive investing in high-risk mortgage loans, politicians, federal officials and lobbyists shielded them from lawsuits that would have protected borrowers and tempered the frenzy.
A principle known as assignee liability would have allowed borrowers to sue anyone holding paper on their loan, from the originators who sold it to them to the Wall Street investment bankers who ultimately funded it.
Without the measure in place, Wall Street increased by eightfold its financing of subprime and nontraditional loans between 2001 and 2006, including mortgages in which borrowers with no proof of income, jobs or assets were encouraged by brokers to take out loans, according to statistics provided by mortgage trackers.
The Bush administration and members of Congress — including a key Republican subcommittee chairman who was later sent to prison for political corruption — sided with lending-industry lobbyists and free marketers who hotly and successfully opposed blanket liability for Wall Street firms selling mortgage-backed securities, according to congressional testimony, other records and interviews.
Yes, you bailed these people out. And what did you get for your money? Nalder adds:
What hope do we have of ever getting our money back — let alone surviving the shit that’s rolling downhill toward us?
At least one bigwig is already on the record vowing that taxpayers shouldn’t wind up paying anything in the long run. Yes, he’s dreaming, but this is what Dominique Strauss-Kahn, chairman of the International Monetary Fund, said to the big bankers gathered in D.C. today (transcript; webcast):
My guess is that Hank Paulson and the other bankers present were probably out of room when the IMF chairman got to that point in the speech.
This article from the Village Voice Archive was posted on October 13, 2008