Why alternative media beat main street media on mortgage crisis

Alyssa Katz writes for Columbia Journalism Review about why traditionally non-business media were first to the mortgage crisis story.

Katz writes, “First and foremost, we looked for the real-world impacts of business practices. Financial journalists tend to focus on the internal benefits (to investors and bankers) of economic activity, without accounting for external social costs. We indies saw benefits and costs as inextricably linked. We could see clearly that it was a zero-sum game, and the gap between winners and losers was growing unconscionably wide. That chasm turned out to be a critical weakness in the financial system.

“The basic model of subprime lending, after all, exploited asymmetries of information between consumers and the financial services and real estate industries. It was only a matter of time before players within the industry—mortgage brokers, subprime lenders, investment banks, ratings agencies, etc.—played the same game, albeit for higher stakes, with the investors who were supplying the funds.

“Two, we indies were also reporting out in the real world, in my case thanks to a magazine that values and invests in place-based reporting. While numbers were a starting point, it was only after I’d spent more than a week in a foot of snow in Cleveland that the scope and workings of the growing crisis began to become apparent. Leads gleaned from foreclosure, property and bankruptcy records, tips from consumer lawyers, and a spreadsheet of recent sales transactions compiled by a community development corporation yielded stories far more vivid and troubling than I could have imagined. Entire streets had been taken over by mortgage fraud schemes that left most houses empty and put remaining homeowners under siege.”

Read more here.