COMMENTS: Three Horseman of the Economy

Something worrying must be going on when the President of the United States and the Chairman of the Federal Reserve Board and the Secretary of the Treasury all appear in the same morning to make public statements about the state of the economy. On Wall Street, the Dow Jones Industrial Average fell below 11000. In Detroit, General Motors canceled bonuses and stock dividends. In California, depositors at the failed IndyMac Bank continued to stand in line to retrieve their money. ABC led with banking worries. CBS and NBC led with mixed messages about a general recession, the Story of the Day. President George Bush declared: "The economy is growing. Productivity is high. Trade is up." Chairman Benjamin Bernanke discovered "significant downside risks to the outlook for growth."

CBS' Anthony Mason noted the concerted effort by the Secretary, the Chairman and the President, although he muddled his nautical metaphors: "It was all hands on deck this morning for the three skippers of the US economy, to assure us the ship is not sinking." If they are hands then they cannot be skippers. NBC kicked off its newscast by contrasting Bernanke and Bush. Erin Burnett of CNBC led off with the Chairman's testimony on Capitol Hill. With inflation climbing and retail sales "barely budging" Burnett found the economy "stuck between a rock and a hard place." Then John Yang filed from the White House where he found a "self-professed optimistic guy" trying to "accentuate the positive."

Following the federal takeover of IndyMac Bank, ABC's Betsy Stark (embargoed link) focused on the solvency of the entire banking system. She ran a soundbite from Bush--"I think the system, basically, is sound. I truly do"--and one from Bernanke--"Our banking system is well capitalized"--before noting that on Wall Street the prices of bank stocks "were pummeled again." CBS sent Bill Whitaker to an IndyMac branch in Encino where FDIC regulators tried reassure depositors that their money was insured to no avail: "People here do not seem to be in a trusting mood."

The topic for Secretary Henry Paulson's testimony was the Treasury Department's plan to extend formal federal loan guarantees to the home mortgage companies Fannie Mae and Freddie Mac. Armen Keteyian filed a CBS Investigation into how those two institutions ended up holding "a pivotal place in the home loan market" and winning privileged legal status including limited regulation, exemption from taxes and access to government credit. Keteyian's explanation was "a vast political machine" including nearly 150 inside-the-Beltway lobbyists and Congressional campaign contributions of $2m since 2004.


You must be logged in to this website to leave a comment. Please click here to log in so you can participate in the discussion.