The New York Review of Ideas » Profiles | June 2009
Bad Foundations
Alyssa Katz tells us that the roots of the housing crisis run much deeper than we think.
By Flora Fair
Unfortunately for the borrower, however, the remaining debt doesn’t vanish. Those unpaid tens of thousands are waiting there to be reckoned with down the road, plus years of additional interest. “Isn’t that predatory lending?” gasps one of the attendees at the Hyatt. Vondran and Brodetsky change the subject.
But Katz is quick to see the situation from the brokers’ view as well, saying that she understands how they “drank the Kool-Aid” along with the rest of Americans, and are now just trying to survive in a miserable economy. She pursues all stories in this way, aware that no one is one-dimensional. She knows that even seemingly despicable characters can rationalize the moral order of their worlds. It’s all about understanding their motivations.
“I think that’s something that’s very powerful for me personally in looking at this story,” she says. “People don’t just do something for no reason, and to presume that they do or that they’re rubbing their hands together and waxing their mustaches doesn’t make for very interesting journalism or for a very clear view of reality.”
As a journalism professor at New York University, she tries to share this approach with her students. Surrounded by a bank of computers, Katz sits in her investigative journalism class at NYU‘s Arthur L. Carter Journalism Institute dividing the class into small discussion groups. Her students consider her well-organized but say they sometimes have a hard time keeping up with her.
Katz herself admits that she puts them through “grueling, grueling work.” She moves between the groups, assessing each student‘s issue with sources, statistics and general storytelling. At one point, her hair is up in a quasi-bun, but it soon falls back around her shoulders in a mess of frizzy waves as she talks to a student with characteristic intensity.
According to her students, Katz is also a professor who “gets it,” who’s still got some of the Village Voice and Rolling Stone in her. It’s evident even in the book, when she describes one of the young Manhattanites who attends a New York City homeownership seminar as a guy “with a Strokes-inspired haircut, designer-ripped jeans, and a girlfriend from Japan.”
After class, Katz sits in the small, tidy office she shares with another professor. It’s where she wrote most of her book. She spends the afternoon meeting with a string of students worried about their investigative beats. Afterward, she sits at the desk, coffee in hand, framed by a view of Astor Place’s ongoing commercial construction in the window behind her. Charged by caffeine and the classroom, she discusses her next story: the looming court battles surrounding home loans and mortgage-backed securities.
The slicing up and selling of home mortgages as investments was as problematic as the abstruce paperwork and mortgage fees. But Katz points out that mortgage brokers and realtors depended on this “sleight of hand” for much of their livelihood. She says that the big question now is how much of the mortgage-backed securities system the Treasury and Congress will protect.
“The biggest hurdle is going to be the courts,” she said. “The courts are ready to decide a lot of battles over pieces of this, so I think that’s just going to keep growing.”
Katz pauses to make a note, realizing that she has articulated a point she wants to pursue. After talking about the long haul ahead, she laughingly apologizes for being so depressing. Between the circumstances she covers in the book and her own less than ideal mortgage, she doesn’t have a lot of good news.
In 2005, faced with a choice between buying her rental or leaving it behind, she and her husband decided to opt out and buy a co-op in Brooklyn. The market was at its height; Katz compares their situation to a game of musical chairs, and they were without a chair. She and her husband were able to take advantage of the reckless lending that was happening at the time, using a stated income loan with paperwork that even the experienced investigative journalist found difficult to decipher. She acknowledges that she, too, paid more than her home would be worth now, but she’s still certain it was the right choice, and she can see how the decision has changed her.
“Your interests become different,” she explains. “You’re a stakeholder in a whole different system because you want your property values to rise.”
Another life-changing event came as she was working on her book proposal: She became pregnant with her daughter, Thalia (named for the Greek muse of comedy). Ironically, Katz, the consummate investigator, is wary of having her personal life examined, but she is very open about how her daughter changed her life personally and professionally. The pregnancy and birth defined much of her work on the book.
“I quite reasonably feared, ‘Oh my god, what’s going to happen to my time? How will I possibly be able to do a substantive book?’” she recalls. “You get a certain level of clarity about priorities and a certain level of discipline that was certainly helpful in doing a book.”
Her husband Bryan stayed home with the baby when Katz’s research for the book took her out of town. True to her obsessive, by-the-book style, she even Fed Ex-ed breast milk back home as she traveled the country in pursuit of her story. And all the data-gathering, the intricate outlining, the nationwide travel for interviews and research were ultimately fed by her personal understanding of what it means to be a homeowner, and her desire to leave a better system in place for her own child.
“You get a lot of perspective as a parent,” she says. “You start confronting questions about your own mortality or about what your hopes are for your child in the future. Much bigger things than one does when you’re in your more narcissistic earlier life phases. Good journalism is about what ultimately matters, and I think having a child has that focusing power too.” ♦