“Mortgage Giant Overstated the Size of Its Capital Base,” reads the headline of this morning’s New York Times.
The headline tops a story by NYT writers Gretchen Morgenson and Charles Duhigg which, like so many articles on finance, quickly leaves me floundering in a murky wake of economic jargon, acronyms, and boardroom corporatese.
I understand the gist of what I read, though I would have opted for a different headline, something along the lines of “CEOs and CFOs of Major American Financial Companies Lie to Regulators, Shareholders and Public, Throw Markets into Chaos, Cost Taxpayers Tens of Billions.”
I am I admit on medication.
I realize that writers and reporters seldom write the headlines that lead their stories and shouldn’t be held to account for them. That duty is performed by headline writers under the supervision of editors who are answerable to the corporate structure and its advertisers.
Writers pen their stories under the same supervision and are answerable to the same powers and advertisers, hence we get stories which fail to state the case clearly, as does my substitute headline.
I am not currently working in the “news biz.”
The story of the private collapse and public bailout of Fannie Mae and Freddy Mac which follows is well written, as we usually expect from the “Times,” and informative, to a point. However it neglects to tell the whole story or to truly point us in the direction of the “real story.”
For instance:
The government’s planned takeover of Fannie Mae and Freddie Mac, expected to be announced on Sunday, came together after advisers poring over the companies’ books for the Treasury Department concluded that Freddie’s accounting methods had overstated its capital cushion, according to regulatory officials briefed on the matter.
I hate to bicker but if I were in the “news biz,” the phrase, “overstated its capital cushion” would be replaced with, “lied to everyone about corporate assets and liabilities.”
I think that my prose is crisper, more direct, and perhaps evocative of Hemingway.
Perhaps it’s the meds.
Again:
Then, last week, advisers from Morgan Stanley hired by the Treasury Department to scrutinize the companies came to a troubling conclusion: Freddie Mac’s capital position was worse than initially imagined, according to people briefed on those findings. The company had made decisions that, while not necessarily in violation of accounting rules, had the effect of overstating the companies’ capital resources and financial stability.
The language chosen is part of the problem, the restraint, the circumspection, the absence of emotion, of outrage. We are left fishing without bait, without a hook. Even the regulators and the people they hire (with our money) to investigate, to audit, to paw through this rancid quagmire of business misadministration refuse to use direct language in reporting what they find.
If Joe Blow is caught stealing bread and baloney from the corner store the headline reads “Vagrant Nabbed for Theft at Local Market.” If J. Whitney Blowville is grabbed for stealing the entire store we are told that “errors in judgment were made.”
Joe Blow goes to jail and is hounded by the justice system for the rest of his crummy life. J Whitney Blowville is asked to resign with an attractive severance package and quickly hired by another firm that recognizes his “business acumen, personal initiative and aggressiveness.”
We see this over and over from the savings and loan collapse of the eighties, through Enron and Arthur Anderson, to Bear Stearns and the present collapse of the entire mortgage lending and finance industry.
“The Fish Rots from the Head,” an Old Russian proverb informs us. We refuse to listen, we use the wrong language, and we are locking up the wrong people. The jails are filled with tail.
Finally, regulators are concerned that the companies may have mischaracterized their financial health by relaxing their accounting policies on losses, according to people familiar with the review.
A “capital shortfall” is “missing money”
“Questionable accounting” is “fraud covering up theft”
“mark-to-market,” and “deferred-tax assets” are corporate bullshit terms used to hide profits and losses.
“Mischaracterized” means “lied.”
Representatives of both companies did not return calls or declined to comment.
A nice direct sentence but I probably would have said, “they took it on the lam”
Apparently they understand the power of language as well as silence.
C’mon, folks, please, let’s sharpen our prose. It is, after all, our only sword.
Ask yourselves this: How would Papa put it?
Bob Higgins
Worldwide Sawdust
