The only way to describe Joe Stephens' article in today's Washington Post, "Obama Got Discount on Home Loan," is to call it an innuendo-ridden piece of thorough-going garbage. It is an explicit work of taint-for-taint's-sake, broadly insinuating wrongdoing on the part of the Democratic nominee, that not only fails to make its case - it mendaciously avoids even mounting a case in the first place.
The facts are these: some time after joining the U.S. Senate, the Obama's secured a loan from Northern Trust in the amount of $1.32 million dollars to purchase a $1.65 million dollar home. The Obamas' received an interest rate of 5.625 percent at a time when the average rate in the area was 5.93 percent.
The discounted rate is explained by Obama spokesman Ben LaBolt thusly:
Obama spokesman Ben LaBolt said the rate was adjusted to account for a competing offer from another lender and other factors. "The Obamas have since had as much as $3 million invested through Northern Trust," he said in a statement.
Northern Trust Vice President John O'Connell adds:
"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."
"The bottom line is, this was a business proposition for us," he said. "Our business model is to service and pursue successful individuals, families and institutions."
These explanations should have stopped this story dead in its tracks, because Stephens' has not a shred of evidence on hand to suggest that anything even remotely out-of-bounds occurred in the securing of this home loan. In lieu of evidence, Stephens instead opts to weave a loose skein of tangential, unconnected innuendo in an attempt to build a mosaic of guilt. In the space of a few short paragraphs, Stephens mentions the Dodd/Conrad ethics inquiry, former Veep vetter James Johnson, and the troubled Countrywide Financial. He describes, at great lengths, the features of the Obama home, including its "marble powder room" and "solarium." Anthony Mozilo and Tony Rezko eventually make cameo appearances. The only thing missing is a description of Obama tying a damsel to the tracks of the L while twirling his mustache.
And I guess this sentence is meant to be "balance": "Obama's Republican opponent, Sen. John McCain, has no mortgages on properties he owns with his wife, Cindy, who is a multimillionaire." Somehow, Stephens fails to note that the multimillionaire, seven-home-owning McCains "failed to pay taxes on their beach-front condo in La Jolla, California, for the last four years."
The big question I have with this story is this: Could the reporter have been better informed on the subject? And, if so, could this story have arrived at a more accurate conclusion? As it turns out, the answer to both questions, is yes. Via FiveThirtyEight (emphasis mine):
So Obama's rate was 30 basis points better than the average. However, the amount of the loan and the nature of the property are not the only factors that determine a mortgage rate. Another major consideration is the creditworthiness of the borrower. According to current rate quotes from myFICO.com, a borrower with very good credit can expect a mortgage rate about 30 basis points better than someone with pretty good credit, and a borrower with excellent credit can expect about a 50 basis point discount.
Unless the Washington Post has access to Obama's FICO score -- and unless it has rented an apartment to him, it probably doesn't -- it is missing a pretty important piece of information on what Obama's mortgage rate ought to have been. What was Obama's FICO score? I don't know, but considering that...
--Obama had just gotten a $2.27 million book deal from Random House -- about $1 million more than the value of the mortgage.
--The Obamas each had exceptionally secure jobs that paid them a combined annual salary of about $500,000 per year.
--The Obamas had just sold their condo, on which they had realized a $137,500 profit.
--The Obamas were prominent public figures whose political futures depended in part on maintaining a reputation for responsibility and trustworthiness.
--The Obamas are known to be relatively thrifty and have no credit card debt but substantial savings.
...I would think that the Obamas were exceptionally creditworthy. So indeed, Obama received a "discount" -- the same discount that any borrower in his position would have received.
The author of the piece at FiveThirtyEight - who rightly compares this report to the New York Times's transcendentally manipulative McCain-Vicki Iseman story - has this to say on the matter:
...one of the things that ties together my work over here and my work at Baseball Prospectus is that I want the media to be smarter and more accountable when they cite statistical information, be it mortgage rates or polling numbers or batting averages. This article was neither smart nor accountable. It's the equivalent of noting that Alex Rodriguez has a batting average 40 points better than the league average, and using that to infer that the umpires were biased in his favor.
A smarter, more accountable media? If only.