by Matt Saldaña
The News & Observer ran a one-source news story in today's business section that reported on a meeting between "executives and journalists" at the paper and Mark Vitner, a Wachovia economist. The piece essentially consisted of Vitner's prediction that the recession would last until mid-2009 (really?), and his admission that banks "fishtailed a little bit" due, in the reporter's words, to "troubles that caused credit markets to stop functioning in the first place."
The Progressive Pulse, the blog of NC Policy Watch, notes that the N&O story failed to mention that Wachovia played a significant role in those "troubles," focusing instead of the ensuing credit crunch. As The New York Times reported in a story that ran pre-bailout, Wachovia was a key player in the housing bubble that went bust:
Wachovia has a $120 billion portfolio of mortgages loaded with adjustable interest-rate loans that allow borrowers to skip part of their monthly payments, much of which it inherited from its ill-timed acquisition of Golden West, the big California lender, at the end of the housing boom in 2006.
The Progressive Pulse is none too pleased that this bit did not make the N&O story, noting that it would be to Wachovia's advantage to leave the phrase "subprime loans" out of the picture:
While Wachovia officials can think whatever they want about the economy, the N&O shouldn’t uncritically report their views, especially when those views have no bearing to reality.
And as far as driving goes, Wachovia's record-setting quarterly loss of $23.9 billion--roughly equal to Panama's gross domestic product--was more than a little bit of a fishtail. It was more like...driving off a cliff?
"Then a big fog came out of nowhere and you forgot about a sharp curve," Vitner said.
In September, the economy plowed through the guard rail, he said. "Now we're in freefall. We've gone over the side of the mountain."
Note, that's the "economy" that plowed through the guard rail, not banks like Wachovia. And, though it goes unmentioned in the story, that guard rail was pretty flimsy.