What Citibank can learn from the House bank.

And what the insulated media can learn from my bounced check 

I don't write bad checks very often, but I did write one last year. It was an honest mistake, the kind many people make: A deposit didn't clear as quickly as I thought. Maybe I got a little sloppy because I believed I had something called "overdraft protection," my reward for maintaining a minimum balance with the bank.

It turned out, however, that this protection was nothing more than an advance of funds at credit card rates--in other words, a pricey loan. By the time I caught on a couple of months later, the meter was running at some 18 percent. But that's just the half of it. I already had the money on deposit in this very bank, in a savings account linked to my checking account. With just a few keystrokes, the bank could have transferred the funds and covered the check. Instead they lent me money I didn't need at loan-sharking rates.

Maybe that experience ought to make me indignant at the House payroll office, which allowed House members to avoid the fate that befell me. But the incident has had just the opposite effect. I can't get too upset with the payroll office because, for all the abuses there, Congress was actually on the right track for once.

Yes, the hundreds of overdrafts by House members such as New York's Robert Mrazek and Michigan's Robert Davis, who had 972 and 878, respectively, strike one as more than casual bookkeeping errors. The individuals exploiting the system for interest-free loans generally deserve the butt-kicking they may get. And there's no denying that the House payroll mess says something about Congress, and especially about its leadership. (Speaker Tom Foley has been indecisive, Minority Whip Newt Gingrich cravenly opportunistic.) Yet while Evans and Novak pounced lustily on the "pampered pols on Capitol Hill," it struck me that there's nothing inherently wrong with the concept of a financial institution that treats its customers as owners rather than as gougees. Abuses aside, the problem was not that the payroll system existed, but that Congress reserves such deals for itself, while failing to make the connection to the injustices the rest of us face. And too often, the media doesn't make the connection either.

In fact, the journalistic blood-feast over this scandal reveals at least as much about the news media as it does about Congress: its proclivity toward dinky stories that beat reporters can slap together on deadline, and the collective mid-life yearning for the glory days of Watergate.

Still, more important is what the payroll office story teaches about how the media defines the political debate. We were repeatedly told that the House payroll office was a "symbolic" issue, but rarely did the media give us a sense of the problems it was symbolic of, aside from a vague sense of governmental malaise.

Americans are pretty angry at the way they are treated by banks, insurance companies, and other financial institutions. A recent poll by Money magazine found that more Americans are peeved about credit card interest rates than about federal income taxes--83 percent to 62 percent respectively. The public wasn't only outraged that Congress gave itself a break; worse was the way it shielded itself from the financial injustices its constituents suffer, thus blunting any sense of urgency to deal with these problems. That the media didn't press the government is a symptom of the sheltered life they lead themselves, compared to the rest of the country.

The fact is, public anger largely follows the direction the media carve out. The House payroll office provides a case study in how the media continually channel the nation's anti-establishment impulses against the government. Rarely are these impulses directed against those who stymie and corrupt that government with money and influence--those who often cause the abuses that people look to government to correct.

By now, readers of the daily press probably know more about the House payroll system than they do about their own banks. The system, created long before any current members were elected, pays House members through a payroll office that operates as a check-writing cooperative. Members' pay was deposited into accounts that together formed a kind of pool from which members could write checks. The payroll office didn't pay interest, the way a bank would. Instead, members could in effect take salary advances by writing checks against salary that hadn't been credited yet. These checks were covered by the pool; it has not been shown that taxpayer funds were used. In practice, the advances often were for just a few days. In this, members were doing pretty much what millions of Americans do with credit cards all the time: buy now and pay within 25 days, thereby avoiding interest. The system had no oversight, however, apart from the Sergeant at Arms, who was an avid checkbouncer himself (31 personal checks worth almost $105,000). With no written guidelines, the system was ripe for abuse. Some members, such as Mrazek and Davis, apparently were aware of the vacuum and exploited it to get free loans.

But this doesn't mean every member did. Press accounts of the system imply that members of Congress were watching their accounts like currency traders in Zurich. Yet a large percentage, perhaps even a majority, didn't even know about the overdraft policy. The reason they didn't pay penalties was the same reason you or I wouldn't: They never got overdraft notices, and any statements they did get concerning their accounts were sketchy at best.

Several members made the plausible argument that they actually lost money; the interest they would have received at a commercial bank would have more than paid the penalties for bounced checks. (Rep. Tom Coleman, a Republican from Missouri, told a New Yorker writer that he didn't use the House payroll pool because his wife thought it was crazy to forgo the interest his money would get at a commercial bank.)

Such tales are much less exciting than those of check-kiting congressmen. Reporters have noted them in passing, like obligatory balancing quotes that are recited and then dismissed. The point is not that particular members were right or wrong, only that the media have shown a remarkable lack of interest in how the House really works, and who was really responsible.

The media's excuse for this lack of curiosity is that the House banking scandal is a symbolic issue pointing to deeper problems in the government. Even if individual congressmen weren't consciously abusing the system, this argument goes, they are getting their just deserts for the institution's collective misdoing, from the congressional pay raise to the general cowardice regarding the nation's budgetary ills. You know, AI Capone was put away on tax evasion, and so forth.

Fair enough. But the House is investing a lot of staff time and taxpayer money dealing with a symbol: five full months for the ethics committee to piece together the accounts and untold additional days for individual members and their staffs. Even if the ousting of unpopular incumbents in November opens up a small window for change in a legislature that needs it, there is no justification for crucifying the innocent. The old refrain of the goo-goos happens to be true: Good people aren't going to run for office if they face getting dragged constantly through this kind of muck. But the biggest trouble with these symbolic issues is that they generally don't lead to solutions to, or even a better understanding of, the larger problems they are intended to symbolize.

Bad feelings about America's financial institutions were a primary subtext of the House bank imbroglio. "If an ordinary citizen wrote a bad check, he could pay a penalty of up to $25 or face interest on the overdraft," declared Time. ("Any American who bounced two or three sizable checks would risk felony charges," echoed Newsweek, upping the ante.) Clearly, members of Congress shouldn't be a privileged caste, but abolishing the House payroll system won't in itself ease their constituents' load. Unfortunately, there's still little pressure on Congress to take action that would lighten it.

Despite the brief flurry of attention last year, for example, credit card rates remain exorbitant. And it's hard to think of a bigger gap between real and advertised prices than in the case of home mortgage loans, where you end up paying thousands of dollars in "points" and other fees. (Unlike the overdrafts at the House payroll office, such practices cost the public real money.) Credit ratings are a similar outrage: The Federal Trade Commission says these ratings are the single biggest source of consumer complaints. The House has been working on a bill for two years. But while covering up its own bad credit risks, it's succumbed to lobbyist pressure and reshaped the bill into anti-consumer legislation that would actually prohibit the states from doing anything to tighten weak federal standards.

Nevertheless, the lesson for survivors of the fall elections is not likely to involve getting tough on redlining and cracking down on credit card interest rates and the rest. Rather, the lesson is going be to balance your checkbook. And the reason lies less with Congress than with the way the media--large and small, inside and outside the Beltway--work.

Curses, FOIA'd again

One reason the payroll story proved so attractive to Washington reporters was that it offered them the opportunity to look like tough investigative reporters with a minimum amount of effort. It's a classic example of the cherry-picking that too often passes for reporting in the Capitol.

House payroll overdrafts have existed at least as far back as the early riffles, when Republicans controlled the House. GAO reports on the office have been public since 1977. And Walter Pincus actually did a small story for The Washington Post back in February 1990, based on a GAO report, that focused on the abuses of former Sergeant at Arms Jack Russ. It was buried on page 23. Then a Roll Call reporter saw the most recent report and wrote the story. The Washington Times and USA Today jumped all over it, and the rest of the press soon followed.

That's not exactly Woodward and Bernstein. In fact, one might well jump on the press for ignoring a problem that was literally right under its collective nose for years. A fact conveniently downplayed in press accounts is that reporters also used the House payroll office, to cash personal checks. What were they thinking about as they gathered their money? If it never occurred to them that something was amiss, how could they be so sure that the members themselves knew? Same for Newt Gingrich, the Minority Whip for whom the press has served as valet on this issue. As a certified check-bouncer, presumably he's known about the lax payroll procedures since he came to Congress in 1978, or sometime thereafter. Why didn't he blow the whistle before now?

Still, the bigger question is not how quickly the press got the story; it's the broader issues it neglected to raise when it had it: What's wrong, in principle, with a bank that operates like a check-writing cooperative? And why can't Citibank and local branches treat us more like their favored customers in- stead of charging 18 percent? For virtually all the pay-and-perks debauchery we read about in Washington, the corporate world has more egregious examples. But the corporate stories tend not to get coverage, as they often involve a hell of a lot more work.

Compared to covering government, reporting on the corporate world is difficult. There is no Freedom of Information Act, no open meeting laws, no free press facilities of the kind that Hill reporters get. (This is one reason why inefficiency and waste in the private sector generally go unnoticed.)

But there's another reason why stories like the House payroll office are so attractive: They're safe. Few editors worry about libel suits when attacking Congress. Few also worry about losing advertisers. For all the pummeling of Congress over PAC money, the media have their own special-interest donors in the form of advertisers. As documented in a recent report by the Center for Science in the Public Interest, reporting on business can be as perilous as voting against the realtors, the drug industry, or AIPAC.

An example of the danger of business reporting is the story of Graef Crystal, the noted authority on executive pay whose bestselling book, In Search of Excess, won him few friends in corner offices. Crystal left a job at Fortune magazine after he was pressured to revise his estimate of the gargantuan pay of Steven Ross, chief of Time Warner (which, of course, owns Fortune). Then he was fired from Financial Worm because of complaints from the CEOs of advertisers. "I can't find a niche in any American magazine that has advertising pages, because my enemies are going to be out there threatening to pull their advertising," Crystal told The New York Times.

Crystal is now a contributor to a Manhattan weekly called the New York Observer, and in a recent column he showed why the nation's corporate media prefer to keep the public focused on Congress. Crystal noted with obvious relish that Time Wamer's outside directors increased their pay from $38,000 to $60,000 a year (plus new pension benefits)--and all this for just "a few days work a year." That's a deal that makes congressional pay look like minimum wage. And it's only a footnote to the pay of Time Warner head Ross himself, who, it turns out, derives large bonuses from a formula that defines corporate profits differently for him than for the shareholders. "The shareholders lost $99 million in 1991," Crystal notes, "but the company was hugely profitable under the definition of profits used for Mr. Ross's bonus"--at least $716 million before taxes.

Crystal's book recounts many examples like the Time Warner case. Common, too, in the private sector is the kind of petty waste that causes such a stir when found in Washington. A number of years ago, for example, The Wall Street Journal mentioned the story of a corporate Sununu--a recruiter who set up interviews for jobs that didn't exist just so he could fly to New York at company expense. I once worked in the field of state tax enforcement, and at the annual meetings, corporate tax reps outnumbered the state officials by a healthy margin. These events were openly acknowledged to be vacations on company expense. People often brought their families and left the meetings early in the afternoon for sightseeing or golf. For government officials, this would be called a "junket." But I began to wonder why we don't care that corporate people waste our money too, although as consumers rather than taxpayers. The money for these trips doesn't come from the invisible hand. It comes from yours and mine.

So why don't the media see it? Maybe for the reason a fish doesn't see water. When journalists proclaim that Congress is "wallowing in privilege and hypocrisy," as John Fund of The Wall Street Journal put it, they're also talking about themselves.

A common anxiety binds together Washington officials and reporters: that they will be exposed as captives of the Beltway culture they comprise. The House payroll office brought these anxieties to a flash point. Nobody wanted to appear an apologist for those disgusting politicians. William Raspberry, one of the few sane voices on the issue, blushed in his Post column that he was "embarrassed" that he couldn't "even figure out what the scandal is." The Post took to quoting the radio talk shows on the issue, more evidence of a growing Washington worry that the national frame of reference is drifting further away. The irony is that the media have become like Reagan and Bush, running against the government they run--thus betraying how much a part of the Capitol culture they really are.

The congressional pay raise was a prime example. Washington journalists were slow to report the outrage because, heck, many of them were making more than congressmen did. It would take at least five of Evans and Novak's "pampered pols" to equal the estimated $900,000-plus income of Novak himself. (As for incumbency, Novak has been incumbent on the Post's op-ed page for almost 30 years, longer than Tom Foley has been in the House.) Pat Buchanan, who reviled the "check-kiting boodling congressmen," makes more than $800,000; with that kind of money, he can write big checks all month, bouncefree. Rush Limbaugh, the fight-wing talk-radio host who gorges on congressional misdoings, pulls in over a million.

Free lunch

Workaday reporters don't match those princely pay levels. But people rarely take a pay cut to go to the Times, The Wall Street Journal, or NBC. Or a lifestyle cut either. During the height of the House bank frenzy, lists of congressional "perks" appeared in the Post and Newsweek. The remarkable thing about the perks was that reporters get many of them too. High on the list of what Newsweek called Congress' "baronial" perks, for example, are subsidized lunches in the members' dining room. Reporters are certainly authorities on the subject of subsidized lunches. When I worked on the staff of the D.C. City Council, a Post Metro reporter asked me to lunch one day. I suggested my usual repertoire of greasy spoons, such as the old Bassin's cafeteria at the corner of 14th and Pennsylvania. "Oh, come on. We can do better than that," this reporter said. "It's on Kay"--meaning, of course, Post owner Katharine Graham. She gets to subsidize a lot of eating, as do the owners of most of the major outlets (which means their readers/viewers and advertisers do). Or take the free parking on Capitol Hill: The press gets free parking there, too (in the choice lot fight behind the Capitol), and this perk's at taxpayer expense.

I don't begrudge the Washington media their nice lunches or parking privileges or their stays in the better hotels. But the effect on them is exactly the same as that on Congress: to dull their sense of personal urgency regarding the financial problems that millions of Americans face. And the implications of that insulation go well beyond the House bank, to some of Americans' most pressing issues.

Take health insurance. Both George Bush and Newt Gingrich have trashed the Canadian system, which is a form of national insurance. "The Canadian system controls costs by letting people die," Gingrich has said. That's false--the Canadian system costs less than America's, and people there are generally happy with it. (By contrast, a Money survey found that 88 percent of Americans think U.S. doctors charge too much.) If these two Republicans weren't coddled in the cocoon of the most socialized medical system in the United States--the one that takes care of elected officials--they might be more in touch with the plight of millions of Americans who don't have insurance or who fall through the cracks of the coverage they have. And if the media didn't have ample medical coverage, they might bring more ardor to the issue, too.

Not too long ago, "PrimeTime Live" did a segment on the deplorable conditions in day care centers around the country. With its hidden cameras, it recorded kids stuck in front of TV sets for hours on end and shadow staff arriving to make a show of educational activity and adequate supervision just before parents came at the end of the day to pick up their kids. After cultivating viewer outrage with shot after scandalous shot, the report switched to the model day care center available to members of Congress, at a very reasonable fee. The message: You should be mad that Congress provides better for itself than it does for the taxpayers.

But that's only half of the message, whether the issue is the House bank or the House childcare center or the House health plan. If Americans are peeved because members of Congress don't share their own misery, then that's a signal to address the misery rather than simply to insist that members of Congress share it. And if the media were a little less absorbed in the exotica of Washington and a little more concerned with the consumer abuses that affect the public every day, that point would be absolutely obvious. What should come of the House bank scandal? Is it that 435 congressmen and a few delegates pay 18 percent interest and vast penalties when they bounce checks, or is it banking reform that ensures that the rest of us don't have to?