The Good, the Bad & the Ugly
ABC Anchor Highlights the Economics of Energy with Pro-Oil Sands Report; CNN Attacks ‘Partisan Standoff’ on Energy in Congress; CNBC's Burnett Declares Schumer Not to Blame for IndyMac Failure.

July 30, 2008

The Good
     Americans drove much less in May 2008 than they did in May 2007, but as ABC “Nightline” anchor Martin Bashir explained the reason was economic, not environmental.

     “[W]e learn today that Americans drove nearly 10 billion fewer miles in May than compared with a year ago,” Bashir said on July 29. “Now, while such drastic reduction in driving is likely to be good for the environment, we know that this is much more to do with economics and specifically, the record gas prices that we've been suffering this year. But what if we told you that there is an alternative to America's reliance on oil from the Middle East? In fact, an ocean of oil that's literally on our doorstep.”

     Bashir’s statement was followed by a report by ABC correspondent Bill Weir, who was exploring the possibility of bringing more supply to the market from oil harvested from oil sands in Canada.

     “The earth beneath that pine and spruce holds as much oil as the United States, Russia and the United Arab Emirates combined,” Weir said. ”The rush to get it becomes obvious a couple hundred miles north of Edmonton where the forest disappears into the largest industrial zone in the world, crawling with some of the largest trucks in the world.”

The Bad
     Can’t politicians in Congress just get along?

     From CNN correspondent Kate Bolduan's perspective, solutions to America’s energy problems would be solved if they could. To Bolduan the political differences on energy policy are little more than a "partisan standoff" between Democrats and Republicans.

     "Even before the votes were counted on the latest energy proposal, the partisan standoff was clear," Bolduan said on the July 25 "American Morning." "[T]hat bill, a Democratic plan to release oil from the nation's Strategic Petroleum Reserve. It failed - one more example of the deadlock over sky-high gas prices and one step closer to Congress going home for the summer without passing anything significant on energy."

     According to the report, the primary conflict involved opening federal lands to offshore drilling.

     "The main battle comes down to whether to allow new offshore drilling," Bolduan said. "Republicans say yes, Democratic leaders say no. The dispute has deteriorated into competing press conferences, dueling poster boards and partisan jabs," she said.

      However, this "standoff" would be eliminated if the Senate, controlled by the Democratic majority, would allow a vote on drilling. Bolduan’s report lacked that important detail.

The Ugly
     Don't blame Sen. Charles Schumer, D-N.Y., member of two influential banking committees for IndyMac's collapse, says CNBC's Erin Burnett. Schumer is on both the Senate Finance Committee and the Committee on Banking, Housing, and Urban Affairs.

     Burnett, host of "Street Signs" on CNBC, disagreed with a claim by MSNBC "Morning Joe" host Joe Scarborough that a letter to regulators from Schumer caused a run on the beleaguered bank IndyMac, which eventually led to its failure and takeover by the Federal Deposit Insurance Corp.

     "I don't think Chuck Schumer caused a run on the bank," Burnett said on MSNBC's July 24 "Morning Joe." "This is the new world of banking. Companies, banks come out and they say, and they say, ‘Oh my gosh - our stock's down 20 percent. It's being manipulated. Please come in and help us government. Oh my gosh, there's a run on our bank - let's blame it on a senator.'"

     On June 26, Schumer sent letters to the Office of Thrift Supervision, the Federal Deposit Insurance Corp. and the Federal Home Loan Bank of San Francisco.

     "I am concerned that IndyMac's financial deterioration poses significant risks to both taxpayers and borrowers," Schumer wrote. "[The bank] could face a failure if prescriptive measures are not taken quickly."

     Burnett insisted Schumer isn't "powerful" enough to trigger panic about a stressed bank.

     "Come on, Chuck Schumer wishes he was powerful enough as being able to cause a run on a bank," Burnett added. "IndyMac had serious problems and a lot of investors had recognized that. I don't like the finger-pointing - that's all I'm saying."

     Perhaps the timing was coincidental, but what resulted after Schumer's letter was revealed by the media was a run on IndyMac. The federal government's Office of Thrift Supervision (OTS) placed the blame on Schumer in a July 11 press release.

     "The immediate cause of the closing was a deposit run that began and continued after the public release of a June 26 letter to the OTS and the FDIC from Senator Charles Schumer of New York," the release stated. "The letter expressed concerns about IndyMac's viability. In the following 11 business days, depositors withdrew more than $1.3 billion from their accounts."

     "This institution failed today due to a liquidity crisis," OTS director John Reich said in the release. "Although this institution was already in distress, I am troubled by any interference in the regulatory process."

The Good, the Bad & the Ugly tracks the best and worst media coverage of business and economics. Readers are invited to submit suggestions or news tips to Staff Writer Jeff Poor at jpoor@mediaresearch.org.