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Caveat Lector: Stuffy Prose May Stifle Facts

Marek Fuchs

Take the unmitigated disaster that is IndyMac (IMB), which has obvious implications for Washington Mutual (WM), Downey Financial (DSL) and, to a less fatal extent, Bank of America (BAC), through its dopey purchase of Countrywide Financial (CFC).

The same rot that hit Countrywide has set in at IndyMac, only worse. The mortgage lender has stopped accepting new loan applications, cannot raise one thin dime of the capital it desperately needs, is seeing a run on its bank, and this week got dumped with a new Wall Street analyst price target of ... 0. As in zippo. Goose egg. The big nothing.

As all of these struggles lay siege on IndyMac and the stock continues its slide toward oblivion, some corners of the business media reacted to the news with an odd twist.

Take the Financial Times. Remember that run on the bank? Last weekend, terrified depositors scurried away $100 million of their deposits ... and that's before IndyMac's troubles and the stock price target of nothing received wide public notice early this week.

And how did the Financial Times capture all that horribleness in its headline? Why, it used IndyMac's own phraseology, which ironed out the horrible:

"IndyMac admits deposit run at 'elevated levels'"

Elevated blood pressure is more like it.

The Business Press Maven can't wait to get to the kicker. Remember the analysts and that price target of zero?

The Financial Times ends the article on a note that, translated into English, refers to this new target. But the senatorial tone favored by much of the old media who, in traditionally having an effective monopoly on distribution, could always play it big, wide and safe, is an affectation that serves only to temper reality. Get a load of this kicker:

"As the bank's stock price tumbled, analysts questioned whether the bank's common shareholders could recover any value from Indymac's lending business in the light of continued home price declines, management's higher loss estimates and the company's decision to stop new mortgage originations."

Imagine how much clearer it would be for readers and investors to understand this mess and a more simpler, say along the lines of this:

"Analysts have started setting price targets of 0. As in, zippo. Goose egg. The big nothing."

Even when that article referred to IndyMac's fleeing its main mortgage business like it was on fire (and it was), it used the word "shrinking" its business.

Compare all of this to the more direct use of language by the Associated Press. Less stuffy, it tells the truth more directly.

Here is the AP's headline:

"IndyMac Bancorp shares dip; analyst sets $0 target:
IndyMac shares plummet after new loans stopped, work force cut; analyst lowers target to $0"

No mention of the "elevated levels" at which people are grabbing their money out of the bank in wheelbarrows.

And instead of getting an oblique mention of the report, we get fill-out -- a quote right from the report:

"'Given continued home price declines, management's higher loss estimates, recent ratings agency downgrades on the company's mortgage-backed securities and the company's decision to stop new mortgage originations, we do not believe that there is any value left for common shareholders,' [analyst Paul J.] Miller [of Friedman, Billings, Ramsey & Co.] said in a note to clients."

We even learn the delicious and straightforward little tidbit that in a letter to shareholders, IndyMac's leader said management is working with federal regulators to come up with a new business plan. In business nearly 30 years and working on a new business plan while customers are grabbing their cash back from the bank? Please don't let them camouflage that reality with stuffy words.