News & Views from 465 California Street

Blind Watchdogs

Clint Reilly
Sep
23
2008

As the stock market reels and storied houses of American finance crumble into the pages of history, the long-running myth of Wall Street’s superior intelligence has also begun to unravel.

A false belief in the supremacy of financial engineering over substantive accomplishment and socially meaningful labor has sapped our country’s commitment to true innovation and seduced a generation of potential entrepreneurs.

To some extent, the press is complicit. By focusing its scrutiny on easy targets in the public sector – while the financial world runs amok – the Fourth Estate has promulgated unyielding faith in the power of high finance.

But this faith has proven poisonous, allowing corporate greed, dishonest business practices and unchecked avarice to corrode not only the gilded foundations of Wall Street, but also the lives and dreams of average Americans across the country.

What about the destruction – before our very eyes – of old-fashioned values like hard work and integrity? What value system rewards the CEO of Merrill Lynch with a $150 million golden parachute following more than $30 billion in losses under his watch?

It is the same system that provided his three successors with $200 million in severance just months later after they sold the company under duress to Bank of America.

What have the various executives of Fannie Mae and Freddie Mac – quasi federal agencies – done to earn the more than $100 million in bonuses they have received over the years? This is an especially burning question now that Fannie and Freddie have been nationalized and U.S. taxpayers are on the hook for upward of $100 billion.

Were these agencies not created as a public service to enable homeownership, not to enrich executives who took no risk? How could the reputed sages at Lehman Brothers and Bear Stearns squander hundreds of billions? And why must the humble taxpayer bail out banks and insurance companies?

Can the clerk, the machinist, the software developer, the carpenter or the nurse fathom an $85 billion loan to AIG or, for that matter, a trillion dollar taxpayer-financed fund to bail out our entire financial system?

Should newspapers not shoulder some of the blame? The obsequious genuflection to wealth on the society page is too often reflected in the news pages as well. Reporters and editors are more attuned to the scent of small-time political corruption than they are to the stench of egregious corporate malfeasance.

The deification of financial titans and newspapers’ dependence on corporate advertising has created bifurcated coverage – political muckraking on the front page and corporate puff pieces on the business page. When real estate ads fuel a newspaper’s coffers, why pop the bubble?

A current New York Times/Washington Post crusade against House Ways and Means Committee Chairman Charles Rangel is a typical nickel and dime exposé. Of course, the portly African American congressman from Harlem is an easy target.

One accusation is that Rangel used congressional stationery for letters seeking contributions to an educational institution bearing his name. Please!

His second offense was failing to report an estimated $75,000 in rental income from a summer home in the Dominican Republic. But the amount was calculated going back 20 years, so Rangel failed to report about $3,500 annually. Of the $3,500 per year, Rangel would only have been taxed a small amount – less than $1,000 per year.

Of course, the Times turned a venial sin into a mortal one by calling for Rangel to resign his chairmanship, confirming the importance of its own investigative journalism. Never mind the congressman’s 42 years of dedicated public service and general competence in his job, not to mention his entirely plausible explanation.

While Rangel was arranging this grand conspiracy, Wall Street collapsed. Apparently, the Times missed the local story: the cracks forming in the foundations of American capitalism right under its nose.

If we have learned anything from this financial crisis, it’s that what matters most in a capitalist society occurs more often in board rooms than in hearing rooms.

For too long, newspapers have covered the wrong scandal.

Comments (10)

  • Dear Mr. Reilly,

    I seldom read an op ed piece I can agree with much. Blind Watchdogs was certainly an exception to that. The thesis is profoundly sound and timely and using Rangel’s case to put the press’s oversight into perspective was a good rhetorical move.

    It would have been a real pleasure to read your piece were I not so worried about our once-great nation’s financial health and the consolidation of so great a portion of the ‘fourth estate’ into ownership by a few extremely wealthy individuals whose aims are so different from almost any of us.

    Thanks,

    Tony

    Posted by: Tony | September 23rd, 2008 at 11:26 am

  • Mr. Reilly….

    Just a quick note to let you know I enjoy reading your comments in our local paper, the Contra Costa Times.
    I especially enjoyed your comments in today’s paper, Blind Watchdogs. I have often thought that the press caters too much to its advertisers, especially in printing grossly exaggerated offers dealing with real estate and auto sales. Many ads tout misleading pricing and credit information (e.g., zero or low % financing…but with tiny print footnotes that hide the true cost of borrowing).

    Perhaps the time has come to encourage the advertising departments of newspapers and other media to include an ethics panel that can review ads before they go to print.

    By the way, I know you have done this in the past, but I think it would be helpful for some of your newer readers if you could more often ad a blurb (perhaps at the end of your column) explaining how you came to writing your columns.

    Keep printing your astute observations!

    Sincerely,

    JGiblin

    Posted by: JGiblin | September 23rd, 2008 at 12:35 pm

  • Here, here!

    I found your remarks in today’s Blind Watchdogs timely and right on target. Thanks for helping more of us see what should have been obvious if we had been paying attention all the more clearly.

    Repsectfully,

    C Totte

    Posted by: CTotten | September 23rd, 2008 at 12:45 pm

  • Thank you, Mr. Reilly, for your article entitled “Blind Watchdogs”. Through recent unending news reports, radio commentary and a noticeable lack of editorials and reader opinions on the Wall Street financial crisis, you have called it like it is. The American people cannot speak out and take action if news agencies don’t give us “just the facts ma’am”. Society as a whole does not take responsibility for its own actions anymore, and now the American taxpayer will dearly pay the price.

    Respectfully,

    Susan Rounds

    Posted by: Susan Rounds | September 23rd, 2008 at 1:51 pm

  • Dear Mr. Reilly,

    Your column entitled “Blind Watchdogs” was exceedingly well written and your major point is a very good one.

    I do think that Charlie Rangel’s “oversight” was a significant one and most taxpayers would consider saving $1,000 in taxes a year or $20,000 over 20 years to be meaningful.

    Nevertheless, your major point was terrific. I hope you have sent your “Blind Watchdog” column to the Times and Post for publication as a letter to the editor or as an op ed piece.

    Thanks for all the columns you have written. I have enjoyed them all. Keep it up!

    Sincerely,

    Stone
    Tiburon, CA.

    Posted by: Stone | September 23rd, 2008 at 2:16 pm

  • HA! Yeah, where WAS the press on this one? Where were the investigative journalists who were supposed to be ferreting out the REAL story? What were they investigating? Why weren’t they educating themselves about what was actually fueling the irrational housing market? Why weren’t they drawing attention to credit default swaps and structured investment vehicles long before these things started to torpedo our economy? What WERE they investigating? Steroids in baseball? Lipsticks on pigs?

    Digging up political dirt, while important, is like picking the low-hanging fruit. It’s easy. What’s hard is digging through the esoteric dynamics of our financial world and then writing about it in a compelling, digestible way. Maybe the press is just lazy.

    Posted by: Dave Battente | September 23rd, 2008 at 3:08 pm

  • Dear Mr. Reilly, I certainly don’t always agree with you, and this made my reaction to this column all the more powerful. This column was one of the most well-stated, courageous essays to come out of the whole election campaign period, if not the last eight years. Congratulations and thank you. Finally someone has told it like it is

    Posted by: S. Ann Lutzky | September 25th, 2008 at 12:33 pm

  • Hi Clint,

    “Follow the money”. Remember those immortal words from Deep Throat during the days of Watergate? I believe that the major reason why today’s newspapers have lost their role as untouchably independent and assumed the pathetic role of corporate lapdogs is how they make their money.

    Gone are the days of the Washington Post when Ben Bradlee would send out his scouts to probe the Nixonian defenses and find weak spots to exploit. After all, today you have to be careful who you might be offending with your poison pen…er keyboard!

    Part of the problem is the change in how people get their news. TV certainly diluted some of the power of newspapers and now the Internet has virtually gutted it as far as I can see. Since newspapers don’t control the Internet and many people like me won’t pay for newspaper subscriptions to the Internet, their only recourse is to accept ads to pay for the news they place there. When you use ads, you have to start watching what you write lest you offend those corporations who support your news effort with their ads.

    So, my contention is that newspapers owed their former independence to the fact that they derived the majority of their income from the newspapers they sold to the public, but today that’s all changed. I’ll bet that corporate ad revenue is now their primary source of income for newspapers. And, when you have sold your soul to that devil, you’ve traded in your pit bull for a chihuahua!

    The Watchdogs aren’t blind, but their growl has either been reduced to a yip or as you point out in your column, they chase after smaller prey. What a shame!

    H.Green
    Sunol, CA

    Posted by: Green | September 26th, 2008 at 9:49 am

  • Well done Clint. And, we all know the political group which controls the press and oddly enough seems to hold many of those greedy CEO positions. A TIME FOR CHANGE.

    I hope you will comment on the debates! !!

    Posted by: Anne Lawrence | September 26th, 2008 at 8:16 pm

  • Clint,

    I don’t believe much will change given the corporate control of Mainstream Media, the lack of competition and the inability to fund investigative journalism. We are clearly at a cross road. How newspapers will survive and provide the information a democracy must have to thrive is unclear. Perhaps newspapers won’t survive or perhaps they will find a way to leverage the potential of the internet.

    In the meantime exciting things are beginning to gel on the internet such as Newsladder, http://www.newsladder.net/. The use of investigative film documentaries which can be posted on sites on the internet is another possibility. There was an interesting panel discussion on whether film can do the job media used to do at the recent Netroots Nation convention in Austin. At that convention we saw several important documentaries covering a range of issues from Katrina to the scandal involving the former Mayor of Providence RI.

    I maintain hope and believe that the important and investigative journalism will rise to the surface. We certainly will not see it come back to Mainstream Media as it is structured today.

    Melinda Maginn

    Posted by: Melinda Maginn | September 27th, 2008 at 10:42 am

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