NBC Blames Mortgages and Unemployment, but Not Borrowers for Debt
It was the day after Christmas and borrowers were the only ones not blamed for credit card debt, by âNBC Nightly News.â Instead, the economy took the bad rep.
NBC senior investigative correspondent Lisa Myers reported on mounting credit card debt, but presented borrowers as victims of credit card companies and a struggling economy.
âWhyâ have American households accumulated almost $10,000 in credit card debt on average â 64 percent more than a decade ago? And why have accounts âseriously delinquent,â late at least 90 days, increased 50 percent over a year ago along with an 18 percent increase in defaults?
According to Myers, âExperts blame fallout from the subprime mortgage crisis and increased unemployment and warn of broader economic consequences.â
Myers didnât mention that unemployment has only risen 0.3 percent since March and is still relatively low, at 4.7 percent for November. According to USA Today, âMost U.S. employers plan to keep their payrolls stable early next year .â
The December 17 Wall Street Journal pointed out that although unemployment has increased slightly, a rise in layoffs that would signal an economic slowdown or recession â one that might cause credit card delinquencies to soar â has not occurred.
âThe job market is signaling a modest slowdown in hiring but not a sharp increase in layoffs,â The Wall Street Journalâs Sudeep Reddy wrote. âWhile jobs continue to bleed from the housing and finance sectors, growth in service jobs remains robust and most other sectors remain afloat.â
Myersâ story cited data from a December 23 Associated Press analysis on credit card debt and the economy. But the AP story made it clear that mortgage problems and unemployment are primarily factors in certain geographic regions.
âMark Zandi, chief economist and co-founder of Moody's Economy.com Inc., cited mounting mortgage problems that began after this summerâs subprime financial shock as one of the culprits, as well as a weakening job market in the
Benjamin Garber, another Moodyâs economist warned âNightly Newsâ of the consequences of unemployment and credit defaults, but didnât blame the credit crunch on unemployment.
âWeâre entering a danger point where rising unemployment and higher mortgage defaults lead us into a delinquency rate that really could not support a growing economy,â Garber said.
Neither âNightly Newsâ nor AP accused borrowers of irresponsible spending, but âNightly Newsâ did fault lenders for raising interest rates in cases where risk is considered higher because borrowers are unable to make payments on other debt.
âOnce consumers get into a hole, lenders â credit card companies included â will slap on fees and have other policies that just dig the consumer in deeper and deeper,â Kathleen Day, from the Center for Responsible Lending, told âNightly News.â
No lenders were represented in the NBC report, though the borrower interviewed was treated as a victim of circumstance.
However, credit card debt could be an issue in the 2008 presidential election. Democratic presidential hopeful Sen. Barack Obama (D-Ill.) is just one candidate who has advocated more regulation of lenders.
âThe truth is, our middle-class families are not going to be secure so long as they can't get out of debt,â said Obama according to a December 3 AP story. âIf weâre serious about stopping Americans from falling deeper in debt, weâve got to crack down on predatory credit card companies that are pushing them over the edge.â
According to Business & Media Instituteâs recently released study on debt issues, âNightly Newsâ was the worst of the three networksâblaming business nine times as often as borrowers. The program also tied with âWorld News with Charles Gibsonâ for ignoring the issue of personal responsibility.