In ten minutes Chris Hayes demonstrates why Mike Daisey didn’t need lies to tell a compelling story about working conditions in Chinese factories. Hayes’ passion propels his reporting without undermining the facts, and by the concluding remarks I find myself in tears.
Today’s New York Time’s story about the DOJ’s investigation into S&P mentions parent company McGraw-Hill as part of the larger picture:
Since the crisis, the agencies’ business practices and models have been criticized from many corners, including in Congressional hearings and reports that have raised questions about whether independent analysis was corrupted by the drive for profits.
…S.& P. is a unit of the McGraw-Hill Companies, which is under pressure from some investors and has been considering whether to spin off businesses or make other strategic changes this summer.
Several of the people who oversaw S.& P.’s mortgage-related ratings went on to different jobs at McGraw-Hill, including Joanne Rose, the former head of structured finance; Vickie Tillman, the former head of ratings; and Susan Barnes, former head of residential mortgage bond ratings. Investigators have told witnesses that they are looking for former employees and that has proved difficult because so many crucial people still work at the company.
In his testimony before Congress on October 22, 2008, former S&P Managing Director Frank Raiter categorized the relationship between S&P and McGraw-Hill more bluntly:
I believe that Standard & Poor’s at this time, there was a raging debate between the business managers and the analysts. The analysts were in the trenches. We saw the transactions coming in. We could see the shifts that were taking place in the collateral. And we were asking for more staff and more investment in being able to build the data bases and the models that would allow us to track what was going on. The corporation, on the other hand, was interested in trying to maximize the money that was being sent up to McGraw-Hill, and the requests were routinely denied. (see page 58 in the PDF of the testimony)
As Frank Partnoy points out, the US Government effectively outsourced a regulatory role in the derivatives markets to the ratings agencies. With this move, the government assumed that the big three NRSROs could look after investors’ —and by extension, the public’s— interests. But how can a for-profit, publicly-owned company balance the need to return a profit to its shareholders while also looking out for the public? Isn’t that the privatization of an industry at its worst?
For further background reading on the rating agencies’ role in the financial crisis, check out PBS’s transcript of Now: Credit and Credibility. Among those interviewed are Raiter and Richard Gugliada, another former S&P Managing Director.
Reid Says Deal Has Been Reached to Reopen F.A.A.
The deal would allow the Senate to approve a House bill extending the FAA’s operating authority through mid-September, including a provision that cuts $16.5 million in air service subsidies to rural communities.
Meaning, if I read yesterday’s article correctly, the Democratic Senate just caved and kicked the can down the road? I acknowledge this much: it’s good news that the collateral damage to FAA employees is quickly ending (for now). But what happens mid-September? Another failed negotiation?
Seeing double. Is this the first occasion the New York Times has used stacked breaking news headlines?
(Sarcastic aside: Wasn’t reaching a debt deal the magic bullet to avoid this kind of market reaction? I can already hear Paul Krugman writing a sad “I told you so” about the myth of bond vigilantes vs. the real peril of a double-dip recession. After all, he’s been warning us for some time.)
Bill Keller on Reporting
From his column in the Sunday Magazine [emphasis added]:
Being right is necessary but not sufficient. We also strive to be impartial. We are agnostic as to where a story may lead; we do not go into a story with a preconceived notion. We do not manipulate or hide facts to advance an agenda. We strive to preserve our independence from political and economic interests, including our own advertisers and including our own government. (NPR, whose news coverage I admire, must surely be wondering whether a federal subsidy is worth its vulnerability to the riptides of Congressional politics.)
My little realm, the newsroom, consists of about 1,100 people. Every one of them has opinions about a lot of things. But just as doctors and lawyers, teachers and military officers, judges and the police are expected to set aside their own politics in the performance of their duties, so are our employees. This does not mean — as one writer recently scoffed — that we “poll people at both extremes of any issue, then paint a line down the middle and point to it as reality.” It does not mean according equal weight to every point of view, no matter how far-fetched. (Sorry, birthers, but President Obama is an American citizen.) Impartiality is, for us, not just a matter of pretending to be neutral; it is a healthful, intellectual discipline. Once you proclaim an opinion, you may feel an urge to defend it, and that creates a temptation to overlook inconvenient facts when you should be searching them out.
The professionalism and rigor described above keeps me a loyal New York Times reader. I’ve certainly added Twitter and Tumblr sources to my news mix, but there’s no need to abandon old media in the support of new outlets.