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Gotta Blame It On Someone's Penis: Gretchen Morgenson Gets A C Minus


So, in this article I took issue with this morning I gave the Times a really hard time and they still deserve it. But I want to amend, or rather add to some of my outrage about the article in question.

The biggest problem I have with the article is that it offers absolutely zero data as to whether or not it was the fault of the CRA, HUD or minorities who caused the sub-prime crisis. As Barry has already reported, here and here and here and here that the CRA had very little to do with the sub-prime crisis that triggered the financial meltdown we are now witnessing.

More after the jump.

The whole of the article is a bunch of over-emotional, hyped up innuendo directed towards Henry Cisneros. Full disclosure: Henry was mayor of San Antonio while I was growing up and for many years I admired him. It wasn't the affair that made me lose faith in the guy, it was the cover-up and the buying-off of the woman that did. That showed a marked lack of judgment on his part. And that is something the article makes clear: he lacks real judgment on critical issues.

For example:

While Mr. Cisneros says he remains proud of his work, he has misgivings over what his passion has wrought. He insists that the worst problems developed only after “bad actors” hijacked his good intentions but acknowledges that “people came to homeownership who should not have been homeowners.”

But he was on the board with these guys and the fact that he was on a committee on that same board that oversaw legal and compliance issues goes to the heart of the argument, especially, as the article mentioned, internal company audits were throwing up red flags. What was his committee doing? Sucking their thumbs? Christ!

But still, the writers just go over the top in the article. They mention disgraced former Countrywide Chariman Mozilo and Cisneros in so many of the same sentences together that it's hard to believe they aren't boon companions. Talk about journalism by innuendo.

I give Henry credit, in the end for being candid about how he feels:

“The irresistible temptation to engage in subprime was Countrywide’s fatal error,” he says. “I fault myself for not having seen it and, since it was not something I could change, having left.”

And yet, Cisneros has, since he left office as Mayor of San Antonio, shown a consistent lack of judgment at critical times in his career. And this whole episode is one of them.

But here's the catch: he didn't get rich, not remotely, especially when judged by the standards of Mozilo's and Fuld's of the world, not to mention all the other bad actors. It's safe to say Cisneros acted in good faith, but still, he showed poor judgment.

All that being said: the Times could have picked someone else to lay it so thick on--but hey, why not pile on a once disgraced formed Mayor and head of HUD? It sells copy, right?

Instead of actually, you know, doing some fact checking in the article (before the article might have been a better time so they would have realized there was no need to write it) they back up the Republican meme (with innuendo as their only tool) that it was the CRA and HUD (those damned womanizing liberals interfering with the free-markets again!) that caused all this mess. If we can't pin it on Clinton's penis then we'll pin it on Henry's! All this article does is muddy the waters even more. Gretchen gets a C minus from me on this one.


Sean Paul Kelley October 19, 2008 - 6:59am
Sean Paul Kelley's diary | printer friendly version | digg
( categories: Business | Economics: USA )

I watched Fox News before

bed last night--they had a special called "Barack Obama: The Ties that Bind?" Oh my, it was just so amazingly awful that I couldn't help but laugh the whole time. Apparently, ACORN, via its get out the vote drive and attempts to get housing for the poor and homeless, has (paraphrase) endangered our democracy and contributed substantially to the current economic crisis.

Then they went on and on about Bill Ayers and the Weather Underground... I haven't watched Fox News in a while, but they've clearly given up even the pretense of being "Fair and Balanced."

Bolo October 19, 2008 - 2:07pm
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Morgenson seems to have recently discovered

the Freddie/Fannie/Dems trifecta which were such a "large" part of the the Big $hit Pile. Early on, I saw her on, iirc, Moyers' Journal. She did not mention this aspect of things.

The powers that be got to her? Helped her to see the light?

Hhhmmm. Some quotes from the 9/19 Bill Moyers' Journal (Floyd Norris was on with her, and earlier Kevin Phillips was scathing):

GRETCHEN MORGENSON: I think this is the biggest story in eighty years. This could be the biggest story since the Depression. And I know I'm not allowed to say the "D" word, because that makes everybody really afraid. But this is the single, you know, most traumatic financial crisis I've ever seen.

BILL MOYERS: How so? Why? What's at stake?

GRETCHEN MORGENSON: Because it affects everyone. It is now possibly bleeding into the economy. We've had a fairly strong economy up until now, which has been a godsend, while this incredible turmoil is taking place. If banks are stopping lending, which they appear to be doing, then that's going to affect the economy, to make the downturn. So it is affecting everyone.

There was a lack of accountability where a banker didn't care whether the loan was repaid. And the Wall Street firm that sold the securitization trust didn't care if it ever got paid back, because they were happy with their commission. The broker making the loan didn't care, because he got, all the way up the ladder to the CEOs of these companies, who are allowed to walk away from a financial cataclysm with huge payments.
...
GRETCHEN MORGENSON: The ugly thing about this is this is privatizing gains and socializing losses. So when things are going well, the managements make out, the shareholders make out, the counterparties are fine. All the private sector people do well. But when something goes wrong, when decisions are made that turn out to be bad decisions, the U.S. taxpayer has to take on the problem.

And there's something very wrong about that. Because all of those people that made all that money are running off here into the distance with the money, carrying it in their bags. And the United States taxpayer is on the hook.
...
GRETCHEN MORGENSON: I'm very, I'm actually sick about it. I wouldn't say I'm scared. But I'm kind of distraught at it, just because, not for myself, but for all the people out there who worked very hard, worked two jobs, trying to make ends meet, wanted to buy a house, got ripped off by some lender. I mean, you know, call me a bleeding heart. But I'm sorry. These people didn't understand what they were up against. (My emphasis)

Lots more in the transcript. Video available as well.

The Repubs have been working hard, working the MCMers* and the public, to make this idea that poor people ripped off the system with the aid of the Dems.

jawbone2 October 19, 2008 - 6:34pm
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*MCMers--Members of the Mainstream Corporate

Media (MCM)--found this formulation long ago in a comment somewhere on the left blogsphere, but is seemed to me to really capture what's happened to the media. It's been corporatized--profits and the corporations' interests must be maximized. Also, the word is "mainstream," not "main stream," as in MSM.

jawbone2 October 19, 2008 - 6:37pm
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These people nailed it....

http://www.ustreas.gov/press/releases/reports/q4progress%20update.pdf

• a breakdown in underwriting standards for subprime mortgages;
• a significant erosion of market discipline by those involved in the securitization process,
• flaws in credit rating agencies’ assessments of subprime residential mortgagebacked securities (RMBS) and other complex structured credit products,
• risk management weaknesses at some large U.S. and European financial
institutions; and
• regulatory policies, including capital and disclosure1 requirements, that failed to mitigate risk management weaknesses

Synoia October 19, 2008 - 8:34pm
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This makes two out of the last three NYT weekend editions

that have put an article at the very least misleading on the FP of the Sunday print edition.


On October 4 we had:

Weather Underground:

Palin, on Offensive, Attacks Obama’s Ties to ’60s Radical.


I don't know of any way you could compress your thoughts on the Morgenstern article to the 3 or 4 paragraphs that are the limit in "Letters to the Editor" , but I sure would like to see them published there.


"The mythical John McCain is an affable, straight-talking, moderately conservative war hero who is an expert on foreign policy" - Bob Herbert

nymole October 19, 2008 - 9:30pm
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BusinessWeek does a decent job of giving an overview:

BusinessWeek Article

The Financial Crisis Blame Game

Think of the current market and economic turmoil as a disaster by committee, with blunders by government officials, Wall Street pros, and regular Americans alike

By Ben Steverman and David Bogoslaw

AMC October 19, 2008 - 9:36pm
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