Orange County Register business columnist Jon Lansner wonders why S&L regulator John Reich believes that the media can cause the downfall of a struggling financial institution.
Lansner, former president of the Society of American Business Editors and Writers, writes, “I’m not going to defend every report on banking made by every reporter in recent weeks. But the media â€“- and the financial analysts we quote about banking’s deep woes -â€“ did not make the bungled executive and regulatory decisions that left, say, IndyMac in such bad shape. IndyMac’s financial hole is estimated to be as big as $8 billion. The bad judgment that created those kind of losses was the culprit for IndyMac’s failure, not a widely reported critical letter written by a U.S. senator.
“In wake of the IndyMac debacle, Reich questions why some analysts are guessing what other banks and S&Ls won’t survive the current economic storm. Reich hints that reporters disseminating those banking critiques are bordering on criminality: ‘I am an ardent believer in free speech and the First Amendment, but I also know our Supreme Court has ruled that free speech has its limits. You cannot scream ‘fire!’ in a crowded theater. Nor, in my view, should anyone feel free to scream ‘failure!’ in a bank lobby. This, in effect, is what happened across America (two weeks ago) and it was shameful.’
“Trying to blame the media â€“- whether the critic be regulator or banker â€“- for challenges of sickly financial institutions is nothing new. I reported extensively on the last S&L crisis in the late 1980s and recall rebukes of my own ‘irresponsible’ reporting by, among others, Charlie Keating’s Lincoln S&L. Keating eventually served jail time for trashing the failed institution.”
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