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Financial crisis done Financial crisis done Presentation Transcript

  • Max Collins, Brent Petrone, Stephanie Steinberg, Ely Twiggs, Lauren Zobl NPR’s News Coverage of the Financial Crisis
  • What is important to the average NPR listener?
    • Useful knowledge for an average listener
    • Explanation of terminology
    • Relating to the audience
  • News Coverage Before September 7th, 2008
    • Positive
      • NPR seemed to be informed of the subprime mortgage crisis and were reporting from “outside the bubble.”
      • Coverage was very fair and did not point fingers.
      • Brought in contrasting and expert perspectives.
      • Used personal stories.
      • Lacked sensationalism.
      • Did not use complex financial terms.
    • Negative
      • Lacked coverage during first half of the decade.
      • Coverage needs more financial advice for the individual.
  • “ Subprime Lending” September 3rd, 2001 Morning Edition
    • This was the first coverage that NPR had that featured Subprime lending.
      • The bubble is beginning to grow.
      • Afterwards, there is no coverage on this financial issue until 2005.
    • This was useful for the average listener because the broadcast talked about how there was an “easy availability of credit” and “people could obtain mortgages through subprime loans that carry higher than normal interest rates.”
      • Subprime mortgage loans have tripled since 1995, and have hit the big banks.
      • Americans owe more than $5 trillion on their mortgages.
    • The terminology was clear and simple except when defining the terms:
      • Refinancing.
      • Predatory lending.
    • Perspectives from the following sources made the broadcast easier to understand: 
      • David Gibbons: Deputy Comptroller for Credit Risk with Comptroller of the Currency.
        • “ The growth in the subprime marketplace really has been sort of a wild west in our marketplace, motivated by people seeking quick profits.”
      • Robert Leighton: Economist from the Brookings Institute.
    • This broadcast relates to the audience because:
      • Relationship between banks and borrowers are told:
        • “ In some instances banks and finance companies are simply taking advantage of borrowers: Hiding punishing interest rates and other fees in complicated loan documents.”
      • Future Homeowners/Borrowers:
        • “ Loans are too risky- That could make it harder for consumers with blemishes on their credit records, to get a mortgage.”
  • “ Mortgage Failures Rise; So Do Risky Loans” February 9th, 2007 Morning Edition
    • Useful Knowledge:
      • Adjustable Mortgages.
      • Payments increase from year to year, and defaults have risen.
        • More Americans defaulting on mortgages than at any point in last 5 years.
          • Defaults most prevalent people with Subprime mortgages.
      • Possible solutions from both sides:
        • “ Martin Eacks told the Senate banking committee this week, banks and brokers should be required to make certain that borrowers can repay a home loan in full, not just the artificially low teaser payments. He also says mortgage brokers should be required to act in the best interest to their clients, just like stockbrokers, lawyers and real estate agents.”
        • “ Doug Duncan argues there's no need for new regulation, since mortgage defaults are not threatening overall economy. Duncan admits many of the risky loan types made popular in recent years have not been widely tested. But he says the market will adjust on its own.”
    • The terminology was simple.
    • Perspectives from Experts:
    • CEO Martin Eacks, Center for Responsible Lending:
      • “ Brokers and subprime lenders are not bad people, but their financial incentives are different than what we saw just 20 years ago. Now, their financial incentives are to close as many loans as possible as fast as possible, regardless of risk. Whether the borrower can repay the loan is really not of their financial concern.”
        • Fairness.
      • Chief economist Doug Duncan of the Mortgage Bankers Association.
    • Relates to the audience:
      • Real life example of an American affected by these high interest rates.
        • Dolores King.
      • What is being done now:
        • “ Banking giant HSBC says it's already getting choosier about the loans it buys. And other investors are also pushing banks and brokers to be more careful in the loans they make…”
  • “ The Mortgage Market: What Happened?” April 26th, 2007 
    • Useful knowledge:
      • Uses many different statistics and facts:
        • Nearly 23 percent of all mortgages taken out in 2005 were interest-only ARMs, and more than 8 percent were payment-option ARMs, according to First American Loan Performance.
        • Subprime loans expanded to 20 percent of the mortgage market in 2006, from 9 percent a decade earlier.
    • Terminology
      • Explains terms like adjustable-rate mortgages (ARMs) and subprime mortgages but does not explain refinancing.
    • Use of perspectives from experts:
      • Federal Reserve executive Roger T. Cole.
      • Kathleen Keest of the Center for Responsible Lending:
        • "They took the riskiest of products and sold them to the weakest borrowers to compound risk.”
    • Relating to the audience:
      • Provides an example of a person and how their montly mortgage payment has increased.
      • Provides solutions/what is being done now that this problem exists.
        • “ Several lenders are taking steps to curtail the rising tide of foreclosures.”
          • Washington Mutual
          • Citigroup and Bank of America
          • Freddie Mac
          • State of Ohio
        • “ Renegotiating loans – lowering the interest rate or extending the payment period – may be more attractive than foreclosing.”
  • News Coverage Between September 7th, 2008 & October 3rd, 2008
    • The news surrounding the financial crisis was well reported.
    • NPR brought in a variety of different sources to cover the story:
      • Editors of economic sections in newspapers.
      • NPR correspondents.
      • Government officials.
    • Previous knowledge is not required to understand a story and the coverage teaches the listener.
    • The stories provide alternative perspectives.
    • Sources and/or journalists admit when they do not know the answer to a question.
    • Most of the news segments we found we broadcasted in the beginning of each show.
  • “ AIG Gets OK to Borrow from Subsidiaries” September 15 th , 2008 All Things Considered
    • This article has some useful knowledge for the average reader including facts about AIG and its possible bailout. It spells out what they need and why they need to be saved.
      • Stock is down 90% this year and fell more than half today.
    • The women being interviewed (Diane Brady, Business Week) uses some confusing terminology that is not clarified:
      • “ Credit derivative portfolio”
      • “ Rampant short-selling of stock”
      • “ Sovereign wealth funds”
    • The article only relates directly to the audience in this one quote:
      • “ They do not want this company to fail. It's in too many areas, it's too big, and the ripple effects would just be too profound.”
  • “ Financial Giants Falling: Lehman, Merrill Lynch, AIG” September 15 th , 2008 Morning Edition
    • This has useful information for the average listener because it informs them of what President Bush is doing to take action.
    • This broadcast does not use any confusing terminology and thus the average reader with no background information can understand it.
    • This relates to people on Main Street (people outside of the financial markets).
      • One option: “The willingness and capacity of financial institutions to lend to consumers and companies will decrease. The economy may stall.”
      • Other option: If we get past the next few days and lending doesn’t decrease “then we may get through this with just a period of rough growth, but not a very deep recession.”
      • “ The key is how much lending goes into the economy.”
    • Sources in the article rely their doubt about what will happen with AIG and are completely honest with the listener.
      • WSJ Economics Editor, David Wessell.
        • He admits that he does not have the answer to whether the financial crisis is getting worse.
      • President Bush.
  • “ Foreign Investors’ Exit Causes Lehman Woes” September 10 th , 2008 All Things Considered
    • This broadcast completely explains as much as Adam Davison (NPR’s global business correspondent) knows about Lehman Brothers and why it is not being bought by foreign banks.
      • The interviewer asks if Lehman Brothers will be bought by a foreign bank and he says: “not that we’ve seen but who knows what is happening in secret.”
    • This article does not have any confusing words and is very easy for any listener to understand.
    • Davison makes sure that the audience knows that the US government is has their best interest in mind:
      • They will not let the foreign banks get a controlling share (more than 5-10%) of Lehman Brothers.
  • “ Under Pressure from Bailout, Lawmakers in Quandary” September 25 th , 2008 All Things Considered
    • This article is useful to the average reader because it describes how the bill impacts legislators and their constituents.
    • The article is very balanced.
      • Interviewed both Republican and Democratic Congressmen.
    • This article does not have any confusing terminology. It is even too simplified at times which makes it informal. This is not necessarily a bad thing.
      • “ I want to make sure that there aren't individuals somewhere sitting on a yacht eating shrimp and drinking champagne that have taken advantage of the American people.”- Representative Jon Porter (Republican, Nevada)
    • This article is entirely related to the average listener because it explains the importance of the bill but also the drawbacks to it and the Congressman's hesitancy about it. The article concludes with:
      • “ Doing nothing at this point will bring those same uncertainties into the marketplace and could start a run on banks and cause failures that end up hurting Main Street.”
  • News Coverage After October 3rd, 2008
    • Even after the crisis ended, NPR continued to break down terminology to help with listener understanding.
    • Articles included historical context about other recessions.
    • Comprehensive one year anniversary coverage recaps key events of crisis.
    • Explained what the government should do to prevent future financial crises.
    • A variety of sources from universities, investment firms and economic research institutions.
  • “ Official Or Not, Consumers Sense A Recession” October 24th, 2008
    • Useful Knowledge
    • Terminology
    • The story gives useful knowledge for the listener than makes it easier for them to understand by relating to other financial crises in history:
      • Great Depression
      • 1973-1974
      • 1980-1982
      • 1990s = Japan
      • Harvard Economics Professor Jeffrey Frankel on Great Depression and Japan’s recession: “Both were ushered in by the crash in real estate and stock markets. Hopefully, the difference is we know how to handle it better this time.”
    • Overall the story used simple terminology and even defined the word recession:
      • “ (Economists) say a recession is ‘ a significant decline in economic activity spread across the economy ’ that lasts for more than a few months and that manifests itself in real gross domestic product, real income, employment, industrial production and wholesale retail sales. The term ‘real’ refers to figures that have been corrected for inflation.”
      • “ Two consecutive quarters of decline in real GDP growth.”
    Photo gallery from this article.
  • “ TIMELINE: A YEAR OF FINANCIAL CRISIS”
    • Interactive timeline outlining financial crisis from Sept. 2008-Aug. 2009. Provides the viewer with a key events and is very useful.
    • Provides details about beginning of crisis leading through the passing of Obama’s stimulus plan and its short term effects which have important affects on the American citizen.
    Timeline
  • “ Series Overview: Examining The Financial Crisis” September 7th, 2009
    • Breaks down crisis into different segments.
    • Offers comprehensible and quick explanations of these segments with links to more detailed stories.
    • Consolidates the financial crisis coverage into one comprehensive page for the online reader to use.
  • “ The Bailout And Fallout: Adding Up The Costs” September 15th, 2009 All Things Considered
    • Knowledge for the average reader: explains what determines if the government’s actions will be a success.
      • How fast the economy recovers.
      • How many banks pay back the Treasury's TARP money.
      • How much the Fed will get for dicey mortgage-backed securities it bought from Fannie Mae and Freddie Mac.
      • Whether Chrysler sinks or swims.
    • Relates to the audience: puts the financial damage into perspective.
      • The bailout could cost taxpayers around $600 billion.
      • "In this new world — what we call the new normal — economies will grow less rapidly,” says investing firm Mohamed El- Erian. "It's going to take us a long time to work our way out of this crisis. And therefore, the ability of the U.S. economy to create jobs is going to be less than it has been in the past.”
        • Erian explains the next generation will face increased taxes and inflation.
        • Impact of loss of confidence in American market.
  • “ Will The Global Economy Learn Its Lesson?” September 17, 2009 Morning Edition
    • Terminology:
    • Relates to the Reader:
    • Pinpoints the problem.
      • Makes a complex issue simple:
        • “ The world economy was out of balance. Countries with the big trade surpluses, like China and Germany, had too much money to spare. They lent it to countries with big deficits. The lending and borrowing got reckless.”
    • Offers suggestions on how to prevent a future financial crisis:
      • Economists: The U.S. needs to sell more goods abroad and import less.
      • Borrow less money from China and other countries.
      • Reduce government spending.
        • Opposite of solution to crisis.
  • Financial Crisis: The Economic Wreckage
  • NPR’s News Coverage Overall
  • What was their approach to financial reporting?
    • NPR attempted and succeeded and at simplifying complex issues for the average listener who may not understand economics.
      • The short segments (especially from Morning Edition) helped to not flood the listener with too much information at one time.
    • NPR’s broadcast transcriptions were in a reader friendly layout.
      • Bullet points.
      • Headers.
      • Introducing sources.
    • Overall, throughout the coverage NPR brought in a variety of different sources several credible institutions.
  • What could they have done better?
    • NPR’s coverage before hand was somewhat limiting although they did cover it briefly in 2001.
    • NPR could have included more average citizens.
  • Overall, was NPR’s coverage effective?
    • NPR had useful knowledge for average listener:
      • It had information that the average listener could understand and relate to their life.
    • Explanation of terminology:
      • The terminology was generally understandable for anyone that did not have any prior knowledge of the topic.
    • Relating to the audience:
      • The articles normally tried to relate back to how the crisis would affect Main Street and the average citizen.
    • Overall, we concluded that NPR was effective at covering the financial crisis.