Why Are the Media More Interested in Blago Than in Unraveling the Bailout Mystery?

Have you heard what's going on with the government's almost trillion-dollar bailout and how your money is being spent? Do you know all you need to know about who's managing all that taxpayer money -- and how effectively it's being used?

Not if you're getting your news from cable TV. Judging by where the media are focusing their attention, you'd think the Blago/Burris/Reid and Kennedy/Paterson/Cuomo soap operas are the biggest issues facing the nation -- and that little thing about the potential collapse of the world's largest economy is just a sideshow.

Why have the media shown such relatively little interest in the utter lack of transparency about the bailout? Is it because they are still in campaign mode -- addicted to small bore, quick burn-out stories?

The time has come to recalibrate. As Obama transitions to governing mode, so should the press. Admittedly, governing stories aren't usually as sexy as campaign stories -- but the reason we cared so much about the campaign in the first place was to get to the governing.

On top of it, the bailout is a fascinating story. Not so much a whodunit as a who's-doing-it. This mystery is unfolding right in front of us, and the size of the victim pool could very well depend on whether we unravel the mystery in flashback or while it's still in progress.

Like most good mysteries, this one has a huge cast of characters -- like the Dickensianly named Neel Kashkari, the young Goldman banker put in charge of the bailout at the Treasury Department, the sharp-tongued Barney Frank, and the earnest and increasingly bewildered Hank Paulson, who started off the bailout process by romantically getting down on one knee in front of Nancy Pelosi and proposing to make the whole thing official.

But what we know is clearly dwarfed by what we don't know, because at every point in this story, the government has chosen to draw the curtains.

Just last week, four firms -- Goldman, Blackrock, Wellington and PIMCO -- were selected to manage the $500 billion account of mortgage-backed securities for the Fed. But how they were selected, what they're getting paid, and what they plan on doing with the money is all under wraps. "The selection of these managers seems incredibly opaque," Jeffrey Gundlach, an expert in mortgage-backed securities, told TPMmuckraker.

The head of one of the firms, Bill Gross of PIMCO, assured CNBC last month that "PIMCO would be the leader here in suggesting to the Treasury that we would work for no fee." So is Gross holding to his no fee pledge? We don't know - and the government isn't in any rush to tell us.

As a GAO report last month dryly concluded: "The rapid pace of implementation and evolving nature of the program have hampered efforts to put a comprehensive system of internal control in place. Until such a system is fully developed and implemented, there is heightened risk that the interests of the government and taxpayers may not be adequately protected and that the program objectives may not be achieved in an efficient and effective manner." In other words, the money is flying out the door but no one is watching where it's going.

The report also noted that the government still isn't able to say what the banks did with the first infusion of bailout money. In a response letter, Kashkari wouldn't say, but noted that the Fed has a "different perspective" on judging what the banks are doing with the money. And just what is this "perspective"? He wouldn't say. His perspective is that we can't know his perspective.

Of course, a lack of oversight was a key reason why Paulson's original bailout proposal was shot down. So some controls were written into the legislation so it could pass. And then what happened to the controls? Did they evaporate? Did they disappear up David Blaine's sleeve? Were they too toothless to begin with? We don't really know. As Eric Thorson, the Treasury's inspector general said, six weeks after the bill passed, "It's a mess. I don't think anyone understands right now how we're going to do proper oversight of this thing."

If the media don't go after this story with the same passion they went after morsels from the campaign trail, or with the same intensity they are going after every Blago/Burris nugget, and allow the government and its cronies to disperse a huge pot of taxpayer money behind closed doors, we know what's going to happen. And that's because we've seen this same scenario played out before -- in Iraq. In a devastating Rolling Stone piece, Naomi Klein details "the many worrying parallels between the administration's approach to the financial crisis and its approach to the Iraq War." She writes that "under cover of an emergency, Treasury is rapidly turning into an economic Green Zone, overrun with private companies collecting lucrative contracts." If the reconstruction of our economy follows the path of the reconstruction of Iraq, we are in for a very long, very hard -- and very painful -- economic slog.

There is an all-too-real economic drama playing out behind the drawn curtain -- a mystery waiting to be unraveled. And journalistic careers to be made by those doing the unraveling. So what are the media waiting for?

 

 

Follow Arianna Huffington on Twitter: www.twitter.com/ariannahuff

Comments

[ChristopherTracy]

Arianna, you make a very good point. I'd like to attempt to answer you rhetorical question this way.... News is a business, as you know. They make more money by appealing to the least common denominator - more people are interested in watching the mighty fall than (or injured) far more than the number of people interested in how government and banks are rescuing the economy.

Like skwidder says - if the mass media won't do so then we shall.

[swkidder]

So Arianna: Make this topic a HuffPost Priority. Let's figure out some prizes to award for the best Investigative Journalism on this topic. You are certainly "Economically Literate," and qualified to judge the worthiness of these submissions. And, to an even greater extent than it is now, it would make HuffPost the "go to" place for those of us who really don't care what Blago/Ann Coulter/Bo­lton/Yoo/C­heney/Bush said yesterday or whether another "blond has done missing."
It's time for HuffPost to grow into its next incarnation - a hybrid that combines the quick reaction information and commentary that is what the web does so well - with the kind of in-depth investigative journalism that truly informs. I'll bet if you asked your readers if they would contribute to a fund that could be used as "prizes" for the best submissions - hopefully the best series of submissions - you'd get an overwhelming response. I'm in for $50. Suzie

[NoCalDavid]

Well said, AH, I am sick of the game playing going on with Blago and Burris, what is REALLY happening with the gazillion dollars going into the finance industry while WSJ has the nerve to say we should watch the size of Obama's ARR program. So FRICKING GREEDY!

[Arenk]

I think the media should be showing the american people exactly what's going on in Iraq, Gaza,Afgha­nistan--we see a commentator commenting--show us photos of the real fighting--show us the streets of Baghdad--what the people are doing --photos of the cities and its people--more realism would be a good thing

[mudshark12]

What is the point of sinking the ship of state (America) when the Wall St Corporate A**holes who created this mess are passengers on the ship like the rest of us? If they succeed in this lunacy then the dollar will be useful only as toilet paper or for kindling fires. I think that this greed x greed x greed (greed cubed) may result in our financial doom. What is their problem anyway?

[GhostwriterDoF]

Their problem? It’s called Social Classes. They perceive themselves Icons, Political Stars and the Ruling Class. America abandoned social classes back in ’76 for something called Equality. There was a big war and a tea party in Boston that wasn’t very popular with the Royalty in England. We've been struggling to rid ourselves of structured classes ever since.

Belay that gloom of doom. Now is the time to get active, now is the time to get involved. We need to remind our Representatives of who they are working for, including the News Media.

[JAHogie]

And what is mudshark12's proposed solution for rescuing the sinking ship of state? Post January 20th, it must be 90% about solutions. Identifying problems, or failed attempts, will remain relatively easy flaming about them even easier. (Think - adult supervision . . . )

[racetoinfinity]

I think (and I've thought this for a while) that since 911, Global Warming gloom and doom, this reactionary power-hungry spiritually empty administration and the cynicism and love of filthy lucre in the culture that has set in since Reagan, it finally came to:

"Get yours and find an island to escape the turmoil coming." (or get a nest with gated guards in hopefully someplace on Earth where global warming and the balloon-burst disaster of an economy won't disrupt us.)

(Fear, insecurity, and the belief that money will console all - shallow to be sure.)

[lilian101]

Whoever said that the media reports news? The media creates news. Soemthing along the lines of misinformation versus disinformation. And if we can get people upset about something and aligned in their need to resolve their upset, then of course nothing else matters.

[satsumajin]

It's situations like this that, IMHO, show up a major weakness of the US political setup as regards vital matters such as transparency, oversight of the Executive. etc. While not claiming that the Westminster (British-style) parliamentary system is without serious flaws, a system in which the leader of the government and other cabinet members are constantly having to defend their policies and actions in Parliament, and in which there is no such thing as executive privilege, seems to make for closer scrutiny and greater accountability than is possible in the US.

[Lenny25]

(HuffiPost must also develop a shadow cabinetesque - a la Great Britain - virtual community to implement the ideas it writes about to counter the weapons of mass destruction that are used against our civil rights by Republicans and Democrats alike. )

In most reputable professions, there is the notion of conflict of interest. A judge who knows or is involved with you cannot decide your case.

So why is Treasury Secretary Henry Paulson -- who helped craft the Wall Street leveraging practices that created the clearly avoidable financial nightmare that this country is in as head of Goldman Sachs -- now going to be the arbiter of how $700 billion is spent to bail out his own malfeasance?

The Democrats and Robert Rubin -- advisor to Barack Obama and secretary of the Treasury under President Clinton -- also have blood on their hands. But just as House Speaker Nancy Pelosi declared impeachment off the table with regard to President Bush, it seems that now criminal prosecution is off the table for Wall Street.

This de facto corporate-­controlled two-party system reminds me of a scene in the film "Bulworth," when Warren Beatty's character asks his black audience, "What are you going to do if you don't like it -- vote Republican?"

If this were a real representative democracy, the government might freeze foreclosures for a year and -- to quote the Rev. Jeremiah A. Wright Jr. -- make the chickens of this economic disaster come home to roost on Wall

[Pastiche]

I wish to comment about something that has puzzled me for some time:
In late 2005 the Federal Reserve announced it would stop publishing the M-3 source of money in March of 2006. As a former business & finance journalist , I was surprised that
this alarming announcement got little play in the media, even the specialized B&F publications. I won't go into a detailed explanation concerning M-3 --- check Barron's Dictionary of Finance and Investment Terms --- suffice to say it includes M-1 and M-2 (from money in circulation, etc., to overnight repurchase agreements issued by commercial banks, money market mutual fund shares, etc.) PLUS the M-3 feature of time deposits over $100,000 and term repurchase agreements.
M-3 has gone unreported since March 26, 2006. Which means no one outside the Fed can even approximate how much "money" and "near money" is being churned out by the printing presses nor--perhaps even more important---the extent of repurchase agreements being used by the Fed in its Open Market Operations as a method of fine tuning the money supply.
Explaining the importance of M-3 to the general public would be an onerous task. But I have not seen it alluded to in any way in any U.S. publication or radio or tv program.
The only time I've heard it mentioned was about two months ago on BBC Radio.
I have been unable to learn why this factor has not received publicity.

[LuckyBlessed]

That's scary .

[InsideTheFrame]

Everyone needs to contact their congressmen and demand to know how our money is being spent. http://insidetherockposterframe.blogspot.com/

[racetoinfinity]

Attn: all media mainstream variety reading:

These cynical factoids strung into a story need to be confirmed as facts or myths:

We have just been witness to the largest organized corporate (or any version of) theft of public monies in Our Treasury (325 billion of it) in history. Their final act starred front man, and recipient of lotsa dough, Paulson, putting on a bad act of bewilderment and collapse, while shoveling the dough to the top ranks of the big houses left - not all that many now.

[MJinCanada]

It's because what the right-wing indoctrinated insist on calling the "liberal" mainstream media is all owned by major corporations run by the right, who have (a) a vested interest in keeping people ignorant and (b) a very condescending view of anyone taking home less than $400,000 a year.

It's a problem here in Canada, too, though not yet as much I think. I refuse to get the local daily because the editorial policy handed down from the reactionary corporate boss is anti-union, anti-minority, anti-science and anti-environment. The present owner's father is on record as saying he dictated the same editorial policy across the entire newspaper and television network chain because he thought that was the way to bring Canadians together: i.e., telling us what to think. Eww!

[FredBrighton]

The internet could be the only democratic system in place throughout the world and so we must protect it from our government. Otherwise we will have no way to sift through the propaganda and lies. The newspaper as a source of news is extinct. It's all infotainment now, as is cable news like CNN and MSNBC. McNeil seems to be on the side of the People, but where is the next generation of truth tellers? Try writing to CNN, see what answer you get. Suppose millions wrote to CNN and demanded NEWS of the world instead of rumor, opinions and propaganda? You think they'd listen, or do they even care as long as their paychecks get signed? This is America's swan song. Pathetic.

[separatingwheatfromchaff]

Part 2
The buck stops with George Bush,he appointed Paulson and all he had to do was tell him to keep a record of all dispersals and the reason they were made.Whoever received the funding should have been advised by Paulson that the quid pro quo was absolute transparency in book keeping with the board of directors of these receiver companies holding liability and facing criminal indictment for misuse of the funds no matter who misused them.This would have forced oversight right down the line,top to bottom.

[YourEG]

Adrianna, thank you.
I just watched I.O.U.S.A. on CNN
It explains some important info we all need as background to the Bailout.
It shows again on CNN Sunday noon PSD, and there is a 30 minute free copy
at
http://www.iousathemovie.com/

I love the Huffington Post.

Leslie

[killmenow]

"small bore, quick burn-out stories"

...That is so well put.

This is a society that sees "news breaks" of just a few seconds on TV networks that always include the latest movie box office receipts when there's only a few seconds to get in the "important" headlines.

Maybe we should immediately transition to digital TV...

If millions of people have all access to television channels suddenly cut off, we'd finally get Americans marching in the streets to protest the failures of their government and the news media. Keep their cable, satellite and analogue TV working, and we'll all comfortably remain on our sofas instead.

[LuckyBlessed]

I've had so many conversations with government officials, it's a joke. People need to stand up and stop living in fear. But I digress.

Here's another interesting tidbit I learned today. Someone at the bankruptcy court said Chase was seeking relief for someone in Chapter 13, but had no documentation of the note, mortgage, or the sale of the foreclosed property. Chase said they weren't going to sell the property. In fact they would sign it over to the BK court. Having been in the industry for years I was astounded. Then I stopped and thought. It made sense.

Stop paying the taxes on the property, let it go back to the county, wherever. Then go after the person who foreclosed with a judgment. And for the loss just use the TARP money. Problem solved.