Financial Podcast Buys A Toxic Asset To See How It Works

from the reporting-by-getting-your-hands-dirty dept

I've written in the past how wonderful NPR's Planet Money podcast is. During the "dark days" of the financial crisis, it was one of the true beacons of light explaining in easy-to-understand detail what was happening, and exploring aspects of the story that the mainstream press glossed over completely. In the process, they broke some stories, highlighted some key aspects of the debate, and really brought a lot more people into the discussion about how we deal with the economic situation of the day. I still listen to every episode on the day it comes out, but in the last few months there really hasn't been that much going on in the economy that needed a really thorough breakdown.

Given that, it seems like the Planet Money crew has hit on a rather brilliant idea. Back when this whole thing started, of course, much of the focus was on the so-called "toxic assets," the derivatives made up of slices of mortgages that had been packaged and repackaged together in creative ways -- in theory to minimize the risk, but in reality, often putting all of the risk in one big basket made to look artificially safe. The focus on toxic assets has mostly fallen off the mainstream press radar, but the folks at Planet Money decided to check in on those toxic assets and dig into what a toxic asset really means. But they were having trouble getting their heads around what a toxic asset really is, how it functions and how to best explain it to their audience.

So they bought a toxic asset.

Literally, the four reporters on the team, along with their producer, each pooled about $200 of their own money, in order to buy $1,000 worth of toxic asset. They'll be tracking whether or not they make their money back, and if they make anything on top of that as well (any profits will be donated to charity). The podcast itself is fascinating, as two of the reporters spend a couple days with a company called Mission Peak Capital, based out in Kansas, which has been analyzing and buying up toxic assets. They go through the whole process of analyzing and bidding on a few of these things until they find the one they wanted. Mission Peak bought the whole asset for $36,000, marked down from $2.7 million, and then sold a $1,000 sliver to the team at Planet Money.

The Planet Money folks have set up a detailed interactive website that goes into great detail about what's in the asset -- probably a lot more detail than most previous owners of the asset knew about themselves -- as well as how much they've made and how long they have until the asset runs out for them (as more of the houses whose mortgages are included in the asset get sold, they get closer and closer to being kicked out of getting any of the remaining revenue).

The story itself is fascinating, but what really drew me to it is what a great example of modern reporting this is. This goes way beyond what we normally think of as reporting, and breaks down that mythical "impartial reporter" barrier in a very effective and useful way. Some people have suggested that the reason why journalism may be struggling these days is that people can go directly to sources themselves (or sources can broadcast themselves) without needing an intermediary to "write the story." Of course, that doesn't mean the role of a journalist goes away, but it changes drastically. In this case, the team at Planet Money has realized that in order to "report" on this story, they need to become the source themselves, and open that up wide to their audience. It's a fascinating and incredibly effective modern form of journalism, and I can't wait to see where they take it. They're already planning to try to track down some of the mortgage holders whose mortgages are in the asset, as well as homeowners and former holders of the asset. Even if you're not that interested in the details of a toxic asset, it's hard not to find the whole thing incredibly compelling. It's useful and educational interactive storytelling at its finest, which is what true journalism should be.

Filed Under: journalism, npr, planet money, toxic asset
Companies: mission peak capital, npr