Media Fail: Lack of Lehman Scandal Coverage
It seems like there’s an unofficial media brownout of the Lehman accounting scandal. Lack of coverage outside the blogosphere is disappointing to say the least. After chastising themselves for sleeping on the job in 2008/09, mainstream outlets have apparently slipped back into their old ways.
Sure, big media outlets are running some stories. But they aren’t front-page, for the most part. As CJR points out, NYT featured the $3b Tommy Hilfiger buyout over the Lehman story.
This Lehman report is only the biggest financial fraud since Enron. Bigger than Enron, actually. This isn’t a dig at at Dealbook and others at the NYT. They’re providing some great coverage, I just wish it was front and center.
Excerpt from the Columbia Journalism Review:
And just like that the Lehman Brothers scandal drops off the front pages. And not just the front pages—the section fronts, too.
Say, we just learned about a $50 billion fraud on Thursday. Think there might be some newsworthy follow-ups here? Actually there are, and both The New York Times and Wall Street Journal have them, but they stuff them inside.
The Journal, which scored recently by bringing David Reilly back into the fold after a stint at Bloomberg, posts a Reilly news article looking at the culpability of Lehman auditor Ernst & Young. The paper dumps it on C7. The NYT has on the same angle—a very good one to examine closely—and slides it inside on B2.
Somehow the Times thought more people would care about Sorkin’s scoop on a $3 billion deal for Tommy Hilfiger or that it was more important than an auditor approving accounting fraud. They don’t and it’s not.
Maybe it’s too dull or complicated for mainstream? The public devoured information about Bernie’s ponzi scheme, and this is much bigger than that. Yet I’m not seeing any sensationalist headlines. It’s all, “Accounting Gimmicks Discovered in Lehman Chapter 11 Bankruptcy Examiner Report”.
Lax coverage of a huge scandal like this just smells funny. Kind of like that nauseating Geithner fluff piece in the New Yorker. Playing ball with coverage on these issues may be the Price of Admission, as CJR suggests.
Tow the admin line, get exclusives and keep access to the White House. Am I getting too paranoid? That’s probably due to the fact that I keep reading about these crazy financial conspiracy theories on the web, and a few months later they turn out to be real.
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6 Comments
thanks. we agree. keep digging and tell us more.
You’re dead right. It’s just too dull & complicated for the lowest common denominator of the general public.
Let’s face it, Bernie’s Ponzi wouldn’t have been nearly as newsworthy if he’d only ripped off people that no one had ever heard of.
Perhaps if some media-darling celebrity – some vacuous, empty headed fluff personality, had lost a whole lot of money in Lehman then the story would become news?
It seems that if Ernst and Young manages to survive after this then we’re guaranteed that another Lehman/Enron will occur sooner rather than later. The Lehman Report from Jenner & Block is explosive, especially the quote on page 990 which indicates a “…colorable claim of professional malpractice exists against Ernst & Young.”
A $50 billion malpractice after Sarbox (because of Enron) should be an automatic Arthur Andersen, however as you indicate, the brownout is putting new life into the practice of “Generally Accepted” Account Principles.
It doesn’t seems as though the Public Company Accounting Oversight Board will follow up on this matter. After all, the “self” regulatory agency for accounting agencies is headed by a former E&Y partner.
I wrote an article on this on Seeking Alpha for those that are interested (http://seekingalpha.com/article/148925-pcaob-our-protectors-encouraging-malfeasance).
My conclusion is that it is more profitable to lead to the destruction of a company than it is to play it “safe.” The gains exceed the fines that will be paid down the road.
Lehman is old news….it was front and center when it went into bankruptcy and triggering the biggest financial and economic crisis in recent times. Accounting scandals are also old news…all companies in financial trouble seemed to employ accounting tricks so those in the know can sell out before the public finds out. Happpens so frequently, nobody blinks an eye anymore. And maybe EY will be charged and disappear like Arthur Andersen, but that’s not new either.
4/06/10
I’m so angry that I could (Spit Fire). Instead of the (Tax Payer) paying for
all of the (Unemployed due to the Fraud & Fixed numbers) at all the banks
responsible for the downfall of this economy, these banks should be pay-
ing all of our Unemployment including taxes that lost our jobs due to this
fraud & greed until we find another job. “This is what happened” Mr tax-
payer, save our jobs for us, so the taxpayer did this. Now, Mr taxpayer,give
us our bonuses & the taxpayer did just that. Then
the banks turned around & jacked anyone with credit cards again (3rdX) &
raised % rates like they went crazy. All these characters need to be sent
to prison for this intentional fraud & take everything they have.
J.R.S.
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