A week ago, I was going through my morning routine, which includes, most mornings, listening to WYPR, the local NPR affiliate, before I head to work. One of the station’s regular features is the “Morning Economic Report,” hosted by local economist Anirban Basu, who heads the local think-tank the Sage Policy Group Inc. In Basu’s minute-long segments, he tends to focus on one part of the economy — housing, banking, public finance — and provide very quick, but usually very expert analysis of data. It’s not quite investment advice, but it’s the kind of thing that a businessperson, an amateur investor or even just an informed citizen might listen to and get ideas about money, the state of the market, or how things are likely to change and develop in the future.
Last Tuesday, Basu’s segment was about being a rental landlord, and a recent report that showed rising vacancies in rental properties in 79 markets across the country. The point of it was, in the end, that renters have the upper hand in the current market, as far as demanding lower rents and better service, because there simply aren’t enough tenants to fill the space. Baltimore was not mentioned specifically, and the implication was that this is a problem of national scope. The transcript started like this:
Those looking for a new apartment should be aware that renters presently enjoy the negotiating upper hand vis-à-vis landlords. According to vacancy and rental rate data … apartment vacancies hit a 30-year high during last year’s fourth quarter and rents have been falling as landlords compete aggressively to retain existing tenants and attract new ones. Rents declined 3 percent last year, led by declines in West Coast markets such as San Jose, Seattle and San Francisco; cities that were expanding briskly prior to the recession. Analysts believe that rental market weakness will last at least through the first half of 2010 and probably beyond …
Here’s the issue: Anirban Basu is, in addition to being a highly respected economist, a rental landlord. He owns five rental properties in Baltimore, a house in Deep Creek and another house in Harrisburg, Pa. Why does this matter? Because he didn’t mention it on the air. He was presented merely as an expert and introduced only in his context as chairman and CEO of the Sage Policy Institute, but the fact is, Basu has a financial interest in the rental housing market, its fluctuations, and questions of business strategy surrounding rental housing investing.
And now’s the time where I disclose that Basu, in addition to all the other things he is, is also frequently quoted in The Daily Record, especially as an expert in our quarterly mergers and acquisitions stories. He also is the lead author on many of the research reports that guide city and state economic policy decisions. This, I admit, is just a fact of life that you have to deal with, being a business reporter in Smalltimore. There are only a handful of economists at local think tanks or academic institutions who cover the local and statewide markets. Richard Clinch of the University of Baltimore and Daraius Irani of Towson’s RESI institute come to mind. And yes, we quote them frequently too.
But WYPR’s lax disclosure rules are a bit troubling. If Basu has a financial interest in something, shouldn’t he mention it when providing expert opinions on the subject? And if the trends he’s reporting are negative, isn’t that all the more reason to ask, Why not? Why shouldn’t he mention it?
Reached by phone last week, Basu said he didn’t see any conflict of interest in the “Morning Economic Report” spots, because they’re very short, and entirely data-based.
“I’m reporting what the data say. I’m working against my own interest, because I’m suggesting that the rental market is weak, and that people can afford to be selective,” he said. “Those are 65-second spots. There is not a lot of opportunity to disclose … I report on the economics of banking, and I sit on the board of First Mariner Bank. I don’t disclose that.”
Well, why the heck not?
We put the question to WYPR’s vice president and program manager, Andy Bienstock, pointing out that Don Fry, who also provides regular commentary for WYPR, always discloses that he is president and CEO of the Greater Baltimore Committee, a business booster group, when he speaks on-air. Bienstock responded that in last Tuesday’s report, he agreed that that there was no conflict of interest, that “putting [Basu] into Jim Cramer territory is an enormous stretch,” referring to the CNBC host who was the subject of a scandal related to disclosure issues last year. But he also said that in mentioning the First Mariner issue, we had “buried the lede.”
“I did not know the full extent of his involvement with First Mariner and, if he is speaking directly about the bank we will ask him to disclose, on-air, his role there,” Bienstock wrote in an email. “We are, co-incidentally, working up internal disclosure forms for all our contributors – both commentators and news stringers. With journalists needing to keep there hands in a lot of pots – just to eat, since full time work is so scarce – we need to do a better job of catching any conflicts of interest before they happen. That way we can either disclose on air, or not air the piece to begin with.”