Wash. Post's Solomon falsely claimed Edwards "opposes" subprime lending
Research ››› ››› SIMON MALOY
During a May 16 online discussion on washingtonpost.com, Washington Post money and politics reporter John Solomon claimed that the articles he has co-authored on Democratic presidential candidate and former Sen. John Edwards' (NC) connections to Fortress Investment Group "legitimately raised" the question of "whether a candidate who says he opposes off-shore tax havens and subprime lending should have worked for a firm that engaged in both practices." Edwards, however, has not said he opposes subprime mortgages, and his campaign website refers to them as "a valuable alternative for families with poor credit."
In an April 23 Post article, Solomon and reporter Alec MacGillis wrote:
Two years ago, former senator John Edwards of North Carolina, gearing up for his second run at the Democratic presidential nomination, gave a speech decrying the "two different economies in this country: one for wealthy insiders and then one for everybody else."
Four months later, he began working for the kind of firm that to many Wall Street critics embodies the economy of wealthy insiders -- a hedge fund.
Edwards became a consultant for Fortress Investment Group, a New York-based firm known mainly for its hedge funds, just as the funds were gaining prominence in the financial world -- and in the public consciousness, where awe over their outsize returns has mixed with misgivings about a rarefied industry that is, on the whole, run by and for extremely wealthy people and operates largely in secrecy."
In a May 11 follow-up article, Solomon and MacGillis reported:
The hedge fund that employed John Edwards markedly expanded its subprime lending business while he worked there, becoming a major player in the high-risk mortgage sector Edwards has pilloried in his presidential campaign.
Edwards said yesterday that he was unaware of the push by the firm, Fortress Investment Group, into subprime lending and that he wishes he had asked more questions before taking the job. The former senator from North Carolina said he had asked Fortress officials whether it was involved in predatory lending practices before taking the job in 2005 and was assured it was not.
During the May 16 washingtonpost.com discussion, a reader noted that such stories "suggest that one's wealth and lifestyle call into question his proposals to help the poor" and asked: "Why don't we see similar stories that would evaluate the impact of certain proposals, such [as] the extension of the Bush tax cuts as an example, on the personal finances of Republican presidential candidates?" Solomon responded:
John Solomon: I'm one of the authors of the Post stories that divulged Edwards' ties to the Fortress Group hedge fund. The question those stories raised wasn't can a wealthy politician advocate for the poor. We already know some of the greatest advocates for the poor were wealthy -- the Kennedys and Bill Gates to name two right of [sic] the top of my head. The question those stories legitimately raised is whether a candidate who says he opposes off-shore tax havens and subprime lending should have worked for a firm that engaged in both practices.
However, Edwards' campaign website explains that Edwards is not "oppose[d]" to subprime lending, but rather to predatory lending. According to the website:
In recent years, the housing market has increasingly relied on riskier mortgages. Subprime mortgages carry higher interest rates and upfront fees than traditional mortgages, often costing families thousands of dollars more. While they are a valuable alternative for families with poor credit, as many as half of subprime borrowers are qualified for cheaper conventional loans. Other "exotic" mortgages -- with "teaser" rates, no downpayments, or interest-only payments -- are often made without regard to the ability to repay. Together, subprime and exotic mortgages are now 40 percent of new home loans.
As Media Matters for America Managing Director Jamison Foser noted, Washington Post ombudsman Deborah Howell criticized the tone of Solomon and MacGillis' April 23 article for implying "that consulting for a hedge fund, whose offshore tax havens he has decried, is incompatible with caring about the less fortunate." Media Matters also documented that a January 19 Post article co-authored by Solomon baselessly suggested that Edwards had engaged in a shady real-estate deal when he sold his Washington, D.C., home for "$1.4 million more than the Edwardses paid four years earlier." Solomon's colleagues expressed skepticism over the story -- Howell described it as "a 'gotcha' without the gotcha." Solomon defended the article in a January 23 online discussion by suggesting -- without offering any evidence -- that the sale violated "federal campaign law" disclosure requirements. After Media Matters pointed out that this seemed to be false, Solomon was asked during a February 7 online discussion if he stood by the claim. Solomon claimed a "snippet" of his comments had been "miscast" by "bloggers," but he did not say whether he still believed "federal campaign law" required greater disclosure. To date, Solomon has still not addressed that question.