Wednesday, July 2, 2008

WaPo on Obama's mortgage: bad journalism 101

Today the Washington Post is driving me nuts. I just blogged about a column challenging the conventional wisdom that Bush is "The Decider." I obviously liked that column because I agreed with it. But I also read an article about the Obamas' mortgage that I think is shoddy journalism. Obviously, I'm biased because they're criticizing Barack Obama. But I think I can handle that. I'm fully expecting to read criticism of Obama that I agree with.

This article, however, is riddled with innuendo and guilt by association. The basic facts are this: after he was elected to the Senate, the Obamas bought a new house. Being elected to the Senate meant that Barack got a raise, and Michelle was promoted at the University of Chicago. Together, they were making around $500,000 a year. His job is about the most secure in the country; she's got a great track record. They have no debt, and they just sold their condo for a profit. So their credit record is, presumably, damn good. Also, Barack had just signed a book deal worth over $2 million.

The problem, according to the WaPo, is that the interest rate was preferable.

He locked in an interest rate of 5.625 percent on the 30-year fixed-rate mortgage, below the average for such loans at the time in Chicago.
Never having applied for a mortgage, I'm not sure how good that is. But takes apart the stats (via Basically, The WaPo does not have anything regarding a case. Barack and Michelle Obama were making good money, had very secure jobs, and no debt. They got a good deal on their mortgage because they deserved it. Like millions of other responsible, normal Americans. Also, the WaPo does not seem to understand the concept of "average." It means that there will be people on both sides of a number; some below, some above. There HAVE to be some people below the average, by definition of the term.

Let's repeat this central idea: The Obamas are, personally, models of financial rectitude. Isn't that a good thing? Isn't that what we want in our presidents? But somehow the WaPo spins it as smelling fishy.

There are a lot of good comments at, many about the bad math at the WaPo. But none of them seem to notice the slippery language in the article. The article sets out the political context: other senators, we have recently found out, got sweetheart deals from Countrywide financial. Jim Johnson, Obama's guy for vetting his VP choices, the one who resigned, was head of Fannie Mae. Of course, Johnson was head of Fannie Mae many years ago, long before any of this happened, which makes his position there utterly irrelevant.

The writer asks this question:

Driving the recent debate is concern that public officials, knowingly or unknowingly, may receive special treatment from lenders and that the discounts could constitute gifts that are prohibited by law.
That's a fair question. The next paragraph would seem to be fair, as well. It's technically accurate, after all.

"The real question is: Were congressmen getting unique treatment that others weren't getting?" associate law professor Adam J. Levitin, a credit specialist at Georgetown University Law Center, said about the Countrywide loans. "Do they do business like that for people who are not congressmen? If they don't, that's a problem."
But note that the speaker is referring to the Countrywide loans. Those were the loans made to the other senators, i.e. the ones that ARE NOT BARACK OBAMA. Obama did not receive a Countrywide loan. But this article is almost entirely about him, so it's almost impossible NOT to infer that the speaker is referring to Obama when he refers to "congressmen getting unique treatment." You have to stop and think and realize that he cannot be talking about Obama, because Obama did not get a Countrywide loan. But unless you stop and think, anyone reading this is almost invariably going to associate Obama with this practice of receiving preferential treatment.

Then there's this line:

"It's certainly safe to say that this borrower did better than average," said Keith Gumbinger, an HSH vice president, noting that consumer rates vary widely. "It's a good deal."
Given the context established, i.e. that senators have been getting sweetheart deals, the suggestion is obvious: Obama got a sweetheart deal because he's a senator. But look at the quote: "this borrower did better than average." But if Obama got a better deal than average because he's a senator, that might be because Senators are better than average. They make more money than "average" people, and they have extremely secure jobs. And maybe these borrowers did better than average because both husband and wife are graduates of Harvard Law School. Maybe they did better than average because they ARE better than average. Which, personally, is a solid part of my defining criteria for president.

Now the article gets into the details of the Obamas' income and their finances, but it is after establishing the controversy of senators getting sweetheart deals. I find this this paragraph particularly egregious:

Jumbo loans are for amounts up to $650,000, but the Obamas' $1.32 million loan
was so large that few comparables are available. Mortgage specialists say that
many high-end buyers pay cash.
Look at the line "the Obamas' $1.32 million loan was so large." This sounds suspiciously like it's reinforcing the "elitism" charge against the Obamas - they got a huge loan. They were doing very well financially, and so they bought a nice house. Isn't that the American dream?

And then there's the line "Mortgage specialists say that many high-end buyers pay cash." That's meaningless in this context. Yes, I am guessing that were Bill Gates to buy this kind of house, he would not be arranging for a mortgage, but would instead use his ATM, or whatever spare change he had lying around. Cindy McCain also presumably can afford to pay cash, which this article points out - the McCains have no mortgages on their houses. So what does that line have to do with the Obamas?

These two paragraphs towards the end also bothered me (just about everything about this article bothered me):

Unlike Countrywide, where leaked internal e-mails documented a special discount program for friends of chief executive Angelo Mozilo, Northern Trust says it has no formal program to provide discounts to public officials. Loan officers may consider a borrower's occupation when establishing an interest rate, the bank said.

"A person's occupation and salary are two factors; I would expect those are two things we would take into consideration," said Northern Trust Vice President John O'Connell. "That would apply to anyone seeking to get a mortgage at Northern Trust." He added that the rates offered to Obama were "consistent with internal Northern Trust rates at that time."

This is just ridiculous. Those two paragraphs are actually exonerating Barack Obama completely. But they start out by citing Countrywide, which is becoming a code word for "corrupt mortgage lender." How about that phrase "leaked internal emails?" That's more code for "somebody doing something bad." And is there any reason to cite Angelo Mozilo, other than to bring in another mention of another shady character?

I want to walk through the logic of the phrase "Unlike Countrywide." That means the opposite of Countrywide. Countrywide is a mortgage lender that has developed a reputation for what were, at best, sloppy mortgage lending practices. So the opposite of Countrywide would be, we can assume, something good.

But that's using a double negative to establish a positive, which is confusing. The article doesn't come right out and say "Northern Trust is a responsible bank that does not engage in the kind of nefarious practices that got Countrywide in trouble." The phrase "has no formal program to provide discounts to public officials" means that they do not provide favors to politicians. Which is a good, responsible approach to mortgage lending - we don't cut special deals for our friends. But it's a rather dry, technical description, and easily misunderstood. They are saying that do not engage in legalized bribery. Good for them! Solid Midwesterners, apparently. But they are also saying that they have no "formal" program to give discounts. What about "informal" programs? Can individual bankers use their discretion to provide favors to friends? Maybe. Which might be what is suggested with the next line, "Loan officers may consider a borrower's occupation when establishing an interest rate, the bank said." So they don't technically have a program to do favors for politicians, but they can consider a person's occupation. That's technically accurate - I would assume that all loan officers consider a person's occupation when they are applying for a mortgage. But given the context established, i.e. that some senators got sweetheart deals because of their occupations, this is highly suggestive.

This article has all kinds of implied negative judgment, but when a positive judgment is called for - i.e. that this bank DOES NOT engage in questionable practices, the writer uses obfuscatory terminology and phrasing. There's no definitive statement to the effect that Obama did not get any preferential treatment because of his status as a United States senator. Given the amount of innuendo to the effect that he did get preferential treatment, the lack of clarity on this score is very disturbing.

What's almost comical about the following paragraph is that it's classic lawyerese: it's making something completely normal sound odd:
"A person's occupation and salary are two factors; I would expect those are two things we would take into consideration,"
Well, yeah. My guess is that roughly 100% of the mortgage applications in this country take into account a person's occupation and salary. Wouldn't it be incredibly irresponsible of a bank NOT to? And then the final line that

the rates offered to Obama were "consistent with internal Northern Trust rates at that time."
In other words, this is completely, utterly normal. Two highly educated, established professionals, both with good-paying jobs and excellent credit records, one with one of the most secure jobs on the planet earth, apply for a mortgage under very normal conditions, and they get it. But it's phrased in dry, bureaucratic terms, which sounds to many people sounds obfuscatory. Why can't the writer just write something along the lines of "the bank says that the Obamas got a regular deal?"

Having conclusively failed to produce any statistically damning evidence against Obama, the writer now turns to more good old innuendo, citing contributions by bank employees in federal elections and to Obama in particular. More suggestions of malfeasance without a scintilla of evidence. Perhaps employees of this bank donated money to Barack Obama because they are all from Chicago. I'm guessing you could look at any bank in Chicago and find donations to people running for federal office and to Barack Obama in particular. They also cite $739,000 in donations since 1990. That is well before Obama ran for any office, state or federal. That's a highly irresponsible number to cite; it has very little to do with Obama. "Federal" elections would presumably include all of the House and Senate races since 1990; in Illinois, that would be dozens of races. And among the people running in those races could be Denny Hastert, former Speaker of the House. I would be surprised if bankers in Chicago didn't contribute to the Speaker's campaigns. It's perfectly normal for bank employees, who are, we can guess, financially well off, to contribute to elections. More perfectly normal behavior somehow rendered suspicious.

And then of course the writer recycles the Rezko nonsense, which is so old at this point that I am not going to go into it.

Bottom line: this article is technically accurate, which is the only thing that keeps it from being a pure hit piece. But it goes to great lengths to imply that Barack Obama got a sweetheart deal on his mortgage, without providing one iota of evidence to that effect. Incredibly irresponsible journalism from the Washington Post.

What particularly bothers me, apart from the sheer irresponsibility, is the corrosive effect that this has on the public's faith in politicians. I hope many people see through this and recognize it for the sham that it is, but I know that others will buy it, and their faith in Obama, and their respect for him, will be diminished, and with it their faith in the political process. And all because Barack and Michelle Obama did exactly what millions of other successful Americans have done: they bought a nice house because they worked hard, and they could afford it.

I really don't like to criticize the "MSM." I think criticizing the press can very easily become an intellectually sloppy, knee-jerk response to bad news for your side. I think both sides practice it, and it comes from all kinds of commentators, from Noam Chomsky to Rush Limbaugh to bloggers of every ideology and degree of intellectual sophistication. The point being that I am reluctant to blame the press if my candidate doesn't seem to be doing well.

But this is ridiculous. The Obamas achieved the American dream: two African-Americans worked their way up the ladder, earning every ounce of their success. The one mistake Obama made was associating with Tony Rezko; he's admitted that, but it's a very trivial detail, and, as for buying their house, they did just about everything right, and basically nothing wrong (other than associating with Rezko).

The exact opposite, unfortunately, is true of the Washington Post.

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