On the front page of the Huffington Post today, there is an ominous headline that caught my eye,"Federal Agency Overseeing Banks Suddenly Hiding Key Information" The headline links to an article, "Questions Arise as FDIC Fails to Disclose Key Details on Bidders for Failed Banks". Alleging that the identities of losing bids for failed banks have not been publicly disclosed for the first time in years, the story links to a report in American Banker. I generally follow the links in stories such as these because I like to consider the source before I decide whether the information provided is credible or merely propaganda. The results of my search today were quite surprising. Follow me over the fold to see why.
I clicked on the link in the article and found that American Banker is an Investcorp Company. Investocorp
Investcorp is a leading provider and manager of alternative investment products, serving high-net-worth private and institutional clients.
Investcorp pursues a highly focused approach, specializing in five lines of business: private equity in North America and Western Europe, global hedge fund offerings, real estate investment in the United States, technology investment in North America and Western Europe and Gulf growth capital. The ability to provide multiple product offerings to our clients is one of our key competitive strengths.
One can click on Our Businesses to find this:
The real estate team, based in New York, sources and performs due diligence, and arranges financing and the acquisition of US properties that offer Investcorp clients investment opportunities with the potential for both strong cash flow and attractive capital gains over a three to five year investment period. Investcorp initially capitalizes real estate acquisitions with a combination of third party mortgage debt and Investcorp equity. (emphsis mine) The properties are typically aggregated into a series of multi-property portfolios for equity placement to our clients. As in private equity, we offer our clients discretion on their investments into real estate portfolios.
The article quotes Dr. Kenneth Thomas as questioning whether the FDIC is choosing the lowest bid for the failed bank because the FDIC has been slow in responding to FOIA requests. The article provided a link to Dr. Thomas and I clicked on that link to find that in addition to the fact that he is a professor at the Wharton School of Business, he is also a consultant to the Banking Industry.
The article goes on to criticize President Obama because, the author alleges, the high volume of unanswered FOIA requests at the FDIC is contrary to his campaign promise of transparency. The implication being that the delay in responding to FOIA requests is really due to President Obama’s unwillingness to effectively deal with the culprits of the banking crisis. The first link which supposedly confirms the high volume of unanswered FOIA requests is to the FDIC, where I see no confirmation of the claims in the article. Rather, I do see a good amount of information including the list of banks scheduled for examination, a list of current assets for sale to investors, and information for consumers. The second link is however to the FDIC’s explanation of the delay in answering FOIA requests. The article also quotes Sheila Bair’s explanation of the delay. All of a sudden, the ominous headline seems mis-placed and one wonders why it was necessary to imply that there is some hidden agenda.
So what to make of this? First, I believe the report is intended to incite the ire of the left and undermine the President's support generally over a claim that President Obama is somehow shielding the FDIC's process for closing and re-opening failed banks from transparency. However, when one follows the links, one sees that the sources of the complaints are International Banking Industry Insiders who claim that they offer privacy and security to high dollar investors and appear to be offering a form of derivatives and mortgage backed securities similar to those which caused the crisis in the first place. The so-called "expert" Dr. Kenneth Thomas, is a consultant to the banking industry (a fact which is not disclosed). And the alleged culprit (other than President Obama), the FDIC, is offering quite a bit of information on its website as well as explanations for the delay.
In the interest of full disclosure on my part, Mr. Tchrldy works for the FDIC but is not involved in FOIA requests or FDIC policy, and is not currently in town. He is unaware of this post. The article initially caught my eye because I wanted to ask him if he knew about the controversy. After I followed the links and discovered the undisclosed conflicts of interest, the misleading nature of the headline and the lack of substantive evidence to support the claims of malfeasance, I decided to write about it to shine some light on the ways in which even liberal leaning online news sources like HuffPo can sometimes contain propaganda planted by industry insiders who attempt to undermine the President for their own selfish gain.
Adolf Hitler claimed,
The function of propaganda is, for example, not to weigh and ponder the rights of different people, but exclusively to emphasize the one right which it has set out to argue for. Its task is not to make an objective study of the truth, in so far as it favors the enemy, and then set it before the masses with academic fairness; its task is to serve our own right, always and unflinchingly.
It seems that the banking industry (or at least these insiders) have taken a leaf out of Mein Kampf and put a liberal twist on it. Consider how insidious the story is: it is placed strategically in a liberal leaning online news source that many supporters of the President trust; it has an ominous and ultimately misleading headline; the author quotes apparently authoritative journals and an expert from academia; the author provides a link to the alleged malfeasor that purports to support his claims and ties the malfeasance to a political opponent of a well-funded interest group. However, the evidence demonstrates that the author failed to disclose the interests and connections of the sources for his article, the connections that would undermine the credibility of his expert, and the links to the malfeasor do not support a claim of malfeasance.
I checked out the author, Shahien Nasiripour. I was surprised to find that Mr. Nasiripour is a member of the Center for Investigative Reporting which makes this claim:
The role that journalism plays in a functioning democracy—informing the public and holding the powerful accountable—is at serious risk. Major issues affecting the very fabric of this nation and the world go uninvestigated. As we struggle to find solutions to two wars, climate change, immigration, a recession, and myriad other global issues, a thriving media is more important than ever.
I suggest that in his most recent article, Mr. Nasiripor has failed to live up to the lofty standards of the CIR.