Coverage of the Financial Crisis Seen in the

New York Times

Amy JosephArielle MellenKori ValentinePeter Martin

Terra Neukam

Coverage of the Financial Crisis

• Overall, we think the New York Times provided Americans with adequate information needed for understanding the Financial Crisis• Leading up the crisis• Peak of the crisis• Aftermath

Coverage Leading Up to the Crisis

• September 23, 2007

• Use of visual/graphic

• Helps readers visualize the formation of the housing bubble

• Lays out warnings AND reassurances

• Engaging title– “BORROWERS BEWARE: A Special Report; Suits Say

Unscrupulous Lending is Taking Homes from the Poor”

• Gives history as to how the 2008 bubble formed and how it got to the point of bursting

“BORROWERS BEWARE…” January 18, 1999 [Front Cover] Randy Kennedy

“But Delta [...] was one of the first to see a vast untapped resource beyond the banks: the investment market. By converting loans into securities and selling them to investors, finance companies could generate a faster profit and have access to much more capital, and make many more loans.”

• The terminology is simple enough for the average citizen to understand and clearly paints a picture of deceptive loans

“Mrs. Leonardi took out a $95,000 mortgage on her home in Sheepshead Bay, Brooklyn, but she said later in a lawsuit against Delta that she was never told she was signing loan papers and believed she was signing investment papers.The papers described her as a 68-year-old self-employed investor making $7,000 a month. In fact, she was almost 73 and was living mostly on Social Security.”

“BORROWERS BEWARE…”January 18, 1999 [Front Cover] Randy Kennedy

''The actual facts,'' he said, ''are that Delta made a loan that made sense at the time to a woman who knew what she was doing at the time.'’

“Mrs. Leonardi remembered it differently. ''At no time did any of these people explain to me that I was signing papers for a mortgage on my home,'' she stated in court documents. ''They merely pointed to the lines, and I signed or initialed as directed. At the time I was so weak that I couldn't walk without assistance and could not read any of the papers that I was asked to sign.’ “

“BORROWERS BEWARE…”January 18, 1999 [Front Cover] Randy Kennedy

• Smooth and logical flow• Supports his opinions• Illustrates progression of problem

“But Mr. Greenspan wasn’t the only top official who put ideology above public protection. Consider the press conference held on June 3, 2003…”

“Blindly Into the Bubble”December 21, 2007 [opinion column] Paul Krugman

“Reasonable estimates suggest that more than 10 million American families will end up owing more than their homes are worth, and investors will suffer $400 billion or more in losses.”

“Meanwhile, during the bubble years, the mortgage industry lured millions of people into borrowing more than they could afford, and simultaneously duped investors into investing vast sums in risky assets wrongly labeled AAA.

“Blindly Into the Bubble”December 21, 2007 [opinion column] Paul Krugman

Then the Bubble Burst...

• Engaging language

• Uses simple language to discuss causes

• Balanced reporting; features shared viewpoint of Martin Feldstein and Obama

“Worries that the Good Times were a Mirage”January 23, 2008 [Business Section] David Leonhardt

“We could be sliding into an extraordinary recession.”

“The recent financial turmoil has many causes, but they are tied to a basic fear that some of the economic successes of the last generation may yet turn out to be a mirage.”

“So, how bad could this get?”

• Simple, engaging language

• International scope; explains larger implications

• Interactive features

“Financial Crisis Enters New Phase”September 18, 2007 [Cover Page] Vikas Bajaj

“It’s like having a fire in a cinema,” said Hyun Song Shin, an economics professor at Princeton. “Everybody is rushing to the door. You are rushing to the door because everyone is rushing to the door. Clearly, as a collective action, it is a disaster.”

“Some economists worry that a psychology of fear has gripped investors, not only in the United States but also in Europe and Asia. While investors’ decision to protect themselves may be perfectly rational, the crowd behavior could cause a downward spiral with broader ramifications.

• Style: draws reader in with compelling quote and thought provoking introduction

• Lets Paulson defend his actions

“Struggling To Keep Up As The Crisis Raced On”October 23, 2008 [Cover Page] Joe Nocera & Edmund L. Andrews

“I feel like Butch Cassidy and the Sundance Kid. Who are these guys that just keep coming? – Treasury Secretary Henry Paulson Jr.”

“In an hour long interview with The New York Times, Mr. Paulson defended Treasury’s actions, saying that he and his aides had done everything they could, given the deep-rooted problems of financial excess that had built up over the past decade.”“I could have seen the subprime problem coming earlier,” he acknowledged in the interview, quickly adding in his own defense, “but I’m not saying I would have done anything differently.” - Mr. Paulson

…but also• Brings in opposing views that critique Paulson and helps

Americans understand the severity and breadth of situation

• Information pertains directly to the reader

• Gives one explanation why government did not bail out Lehman Brothers

“For the equilibrium of the world financial system, this was a genuine error.” – Christine Lagarde (France’s finance minister)

“The failure of Lehman [acted as] ‘a trigger’ for events leading to the global crash.” – Frederic Oudea (Oudea (chief executive of Société Générale—one of France’s biggest banks)

“I never once considered it appropriate to put taxpayer money on the line in resolving Lehman Brothers,”

“When pressed about why it was legal for the Fed to lend billions of dollars to Bear Stearns and A.I.G. but not Lehman Brothers, Mr. Paulson emphasized that Lehman’s bad assets created “a huge hole” on its balance sheet. By contrast, he said, Bear Stearns and A.I.G. had more trustworthy collateral.”

“Asked what he might have done better, Mr. Paulson replied, ‘I could have made a better case to the public.’”

The Aftermath• Website = an extremely useful resource– “Overview”, Updated July 12, 2010• Constantly being updated, thus

constantly informing readers• Recognition that this is an ongoing crisis,

still important to Americans

–Use of multimedia• Interactive features, videos, graphs, interviews• “How the Government Dealt With Past

Recessions”

• Encourages understanding• Search tool for terms & links in articles• Links to books • Links to external sources (Businessweek, The Washington Post,

PDFs, government documents)

• Ease and accessibility• User friendly• Everything in one place• Highlights most relevant articles

from 2006 – 2010

The Aftermath

Overall Findings: Strengths

• Creative ways to draw readers in (especially average citizens)

• Catchy introductions: “So, how bad could this get?”• Common language, logical transitions/ conclusions

-Even in opinion columns [Paul Krugman]

• Metaphors: fire in a movie theater example• Compelling images• Graphs and interactive features

– 1960’s to 2001 example

Power of Images

Overall Findings: Strengths

• Appears in all sections of the paper• Front page, Business Section, Editorials, Magazine

section

• Repeating authors; wide variety of authors• Different writing styles• Tons of reporters excess amount of information

• Website• www.NewYorkTimes.com

Overall Findings: Weaknesses

• Very dense/ not very concise• Articles were very lengthy; took long to dissect

• Amount of information can be overwhelming• Bombarding the citizens

• A search on Lexis Nexis did not bring up any articles mentioning warnings from Jason Thomas or Lawrence Lindsay. For example…

Overall Findings: Weaknesses

Jason Thomas sent charts to top white house and treasury officials showing that housing prices were wildly inflated and bound to plunge—appropriate conditions for foreclosure crisis (March 2007)

Lawrence Lindsey (2006) was the former chief economics advisor and he told white house officials that housing prices were headed for a crash.