Lehman Media Coverage Unforgivably Sloppy

The news of Lehman Brothers' bankruptcy struck big and hard over the weekend, when most self-respecting reporters were inebriated in a dark, depressing bar or were with their families, wishing they were inebriated in a dark, depressing bar.

The news of Lehman Brothers' (LEH Quote) bankruptcy would be hard to wrap our heads around on any day. The fact that it came on a weekend, calling reporters and editors into action from home -- or forcing them to work from home with little ones were tugging on their shirts asking them to play Barbies -- resulted in a particularly high number of errors in their reporting, both factual and thematic. Though The Business Press Maven can normally dwell on other people's mistakes forever, I'll limit myself to four mistakes of either fact or theme:

CNNMoney went with this dumbbell of a lead:

"After enduring one of the most dramatic days in its history, Wall Street received a climactic jolt on Monday when Lehman Brothers, a 158-year-old investment bank undermined by bad bets on real estate, said it will file for bankruptcy."

Climactic jolt? Never mind the imagery, how many times are we going to have to put up with the business media declaring a bottom, a dramatic turning point, a climax for the financials. Even as Lehman topples, we have AIG teetering. If Lehman's meltdown was a "climactic jolt," what might AIG be later in the week? My imagination fails me. The New York Times plain flubbed the definition of a long-short fund here:

"His is a so-called long-short fund, which means he invests $2 buying shares in companies for every $1 he places shorting other companies."

In the same article, from the lead onward, The Times harnessed David Einhorn, the hedge fund manager who was the earliest and most prominent shorter of Lehman and critic of the stock's woeful accounting, to the type of shorts (and there are plenty) who spread false rumors for quickie trades:

"In May, David Einhorn, one of the most vocal short sellers on Wall Street, made no secret he was betting against Lehman Brothers. Now, some investors are afraid that fund managers like him will take advantage of the climate of fear stirred up by the troubles of Lehman to single out other weak financial firms whose declining share prices would bring them rich rewards."

There needs to be a distinction made. In fact, if Lehman management had admitted it's to blame in all this, and had spent more time fixing its errors and less time deriding Einhorn, it might just have saved itself. More than that, in the absence of a business media that understands accounting and can serve as a legitimate Fourth Estate, those legitimate shorts like Einhorn have a role to play in keeping the market on the up-and-up. Management teams all over America live in fear of Einhorn poring over their balance sheets; that's a good thing.

Look at this headline from Barron's : "A Hellacious Hurricane Hits Lehman Brothers." Never mind the trite reference to the more serious disaster that happened this weekend in Texas. Nothing "hit" Lehman, except itself. Lehman's demise is a cautionary tale about valuing securities on a whim and prayer.

We used to hear that as General Motors goes, so goes America. But The New York Times told us this weekend that the American economy won't shape up until Wall Street does:

"Until the worst turmoil on Wall Street ends, the economy will struggle," said Sung Won Sohn, an economist at California State University, Channel Islands, who studies financial markets. "Until and unless we have financial markets stabilize, I don't think we will see a meaningful recovery in housing, and therefore in the economy."

He said he expected economic growth to remain close to zero through the middle of 2009 before finally beginning to accelerate.

I'd side with Alan Greenspan, who said the opposite this weekend. He said that Wall Street won't recover until housing does. Wall Street doesn't lead, it reacts. And when the accounting is made up on the fly, the reaction -- despite all the attendant noise from the business media on personalities, evil shorts and potential white knights -- is seldom good.