09/12/2008 03:21 pm ET Updated May 25, 2011

A Children's Story: NPR, NY Times and the Media fail to Explain Fannie/Freddie Debacle

So what, dear reader, does the federal bailout of Fannie Mae and Freddie Mac mean for you? That was the question the media was burdened with answering last week, after Treasury Secretary Henry Paulson announced plans to rescue the two ailing mortgage giants.

And it was no easy task, considering most Americans, including reporters, editors and a certain hockey-mom-cum-vice-presidential-nominee, didn't have a clue as to what the two government-sponsored enterprises actually did -- let alone what a government sponsored enterprise is -- or why the Treasury secretary was apparently toting, then suddenly shooting, a bazooka, for God's sake. (For the record, according to the Factiva news retrieval system, the words "Paulson" and "bazooka" could be found in at least 81 news reports since July 13, when the Treasury chief rather unfortunately compared his unlimited authority to lend to Freddie and Fannie with a portable rocket launcher.)

For its sheer lack of pretense, we sort of liked New York magazine's Intel blog's approach to the story. It produced what it called "The For-Idiots, By-Idiots Guide to the Fannie Mae/Freddie Mac Bailout," which was surprisingly comprehensive and not really dumb at all, especially compared with the more earnest but less nuanced, not to say ironic, reports put out by other news outlets. First on that list comes from suicidally cheery, which started one of its Polyanna-ish reports on the bailout by imploring mortgage applicants to "rejoice!," since rates could drop by 1 percentage point. Yippee!

Alas, that's not what most newspapers were saying, including The New York Times, which in its page 1 story on what-the-bailout-means-for-you-dear-deadbeat noted that "the emerging consensus is that the government takeover will help stabilize rates" or, if we're lucky, rates "might even fall a quarter of a percentage point or so."

For its part, a widely disseminated Associated Press report pegged the possible rate decline at as much as half a percentage point but warned that "continued investor wariness and a depreciating housing market will keep rates from dropping further." Bummer.

Meanwhile, in a piece in its business section, the Times, as is its wont, turned the rescue into an executive comp story, noting that Daniel Mudd and Richard Syron, the departing heads of Fannie and Freddie, respectively, stand to collect millions of dollars in severance pay while "ordinary stockholders," represented here by the ubiquitous Richard Ferlauto of the American Federation of State, County and Municipal Employees, get pretty much wiped out.

The velvet-voiced journos over at National Public Radio also spent a good portion of last week wrestling with Fannie and Freddie, including trying to explain to their groggy morning audience how the two mortgage giants affect the country's position in the global economy.

"But it's going to be fun. There's no jargon, I promise," reporter Adam Davidson reassures his listeners, as if the mere utterance of the term "mortgage-backed security" would be enough to send NPR fans in search of Howard Stern. "In fact, in a minute or so, you'll meet a real amusement park sideshow carny," he chirps.

Lucky us.

Davidson makes good on his promise, and before we know it, we're at Coney Island, where Davidson is chatting up the operator of a game called Kentucky Derby, whose players are throwing little rubber balls into little holes to make their horses advance. We're supposed to imagine that the balls are trillions of dollars and that the players are throwing them over to China. That, we're told is the trade deficit. But the balls, or dollars, come back, so Americans can take out loans and buy stuff they can't afford. We guess that makes sense, sort of, but we still don't get why Davidson had to schlep out to a down-on-its-luck amusement park to make his point.

What's next? A trip to the Bronx Zoo to report on the troubles over at Lehman Brothers? We can hear the jargon-free (and information-free) pitch already: When it comes to ruthlessness, the animal kingdom doesn't have much on Wall Street.