Can the *New York Times* please hire an ombudsman to deal with its ombudsman, Clark Hoyt?>Clark Hoyt: On Thursday, [*New York Times* reporter Edmund Andrews] came under attack from a blogger for The Atlantic for not mentioning in his book that his wife had twice filed for bankruptcy — the second time while they were married, though Andrews said it involved an old loan from a family member. He said he had wanted to spare his wife any more embarrassment. The blogger said the omission undercut Andrews’s story, but I think it was clear that he and his wife could not manage their finances, bankruptcies or no. Still, he should have revealed the second one, if only to head off the criticism…This grates for four reasons:1. “a weblogger” has a name: Megan McArdle of the *Atlantic Monthly*. She deserves credit for her work.2. “a weblogger” has a reputation–a considerably better reputation at this point than Clark Hoyt or the *New York Times*, I believe. When something appears attached to Megan McArdle, I know that she is smart, has worked hard, and is trying her best to get the story right. Readers deserve to know who Clark Hoyt is pitting himself and his organization against so that they can make their own assessments of credibility. I know that Megan McArdle tries (if not always succeeds). I don’t know about the reporters and editors of the *New York Times*–indeed, I know that at times they work hard to get the story wrong, witness [Elizabeth Bumiller, “1 in 7 Detainees Rejoined Jihad”](http://www.huffingtonpost.com/shayana-kadidal/the-myth-of-return-to-the_b_206….3. At the time when Hoyt wrote he knew or ought to have known that Patrica Berreiro’s second bankruptcy discharged $29,000 in family loans, $7997.25 in lawyers’ bills, $3604 in telecommunications bills, $9065 in medical bills, $5377 in credit-card debt, $188 in veterinary bills, and $83 in fines from the Los Angeles Public Library. To write that it “involved an old loan from a family member” is remarkably incomplete.4. Megan McArdle’s point is that dysfunctions in mortgage lending have next to nothing to do with Edmund Andrews’s personal financial crisis. The crisis comes from the radical disjunction between the style of life Andrews and his wife expect and Andrews’s income–$10,000 a month, $3,500 in taxes, $4,000 (in the book; $5,000 in the bankruptcy filing) in alimony and child support, leaving $2,500 a month to live on for all expenses. If Andrews hadn’t bought his house in Silver Spring he would, McArdle believes, be in a worse financial position right now–for one thing, his landlord would have evicted him. I think she is probably right, and that Patricia Berreiro’s second bankruptcy is telling evidence for McArdle’s position. Hoyt’s claim that “I think it was clear that [Andrews] and his wife could not manage their finances, bankruptcies or no” appears to me to be a deliberate attempt to miss the entire point.So Ed Andrews’s adventures in real estate have lost him $46K in NYT stock that he sold to make his down payment–stock that would now be worth $14K…He has now lived rent-free for the ten months since be stopped paying his mortgage–call that +$32K…He paid essentially a market rent for the house via his mortgage payment but he got a tax shield worth $500 a month for 42 months–+$21K…And he pumped $58K out in his home equity loan…So by my count his adventure in real estate has enabled him and his wife to spend $97K more over the past five years and still arrive at the same asset position as if they had rented…There are three ways that the debt system screws people:1. It leads them to take out too-large loans at too-high interest rates so that they spend or lose a fortune and get nothing for it–but Andrews’s interest rates have been more than reasonable.2. It gets them overhoused–they buy a big house they cannot really use, and they knock around in it, and they pay for that big house through the nose. But Andrews’s house was not a McMansion and was not in a pricey central location like Clevland Park.3. It allows them to escape from habits of thrift–they wind up broke, while if the system hadn’t been nudging them in the wrong direction they would have been OK.Andrews is clearly not a victim of the system in senses (1) or (2). Now Megan McArdle is arguing that he is not a victim of the system in sense (3) either–that no matter what the financial system Andrews would now be facing bankruptcy. Moreover, on this reading the debt system has actually advantaged Andrews substantially. In a counterfactual world in which Andrews had rented and not bought, he would now have an extra $14K in *New York Times* stock (all that would be left of the $46K in stock he sold in 2004 to assemble the down payment, but in the meanwhile he paid about $2.5K a month in mortgage payments for a house it would have cost him about $2.5K a month to rent, the deductability of mortgage interest has given him about $21K in tax shields, he has lived rent-free for ten months since he stopped making mortgage payments and so gained an additional $25K, and he pumped $58K in home equity loans out of the house. As I see it, the willingness of the financial system to lend to him has allowed him to spend an extra $90K since 2004.The question is: if the financial system had not encouraged him to borrow so much, would he have made wiser decisions and arrived at this point with more assets? Megan McArdle argues that Patricia Barreiro’s two bankruptcies spaced eight years apart make that highly unlikely, and she has a very strong case.That’s why it is of interest–not Hoyt’s “he should have revealed the second [bankruptcy], if only to head off the criticism,” but because it shapes how we assess the damage done by the too-easy availability of credit.—-McMegan:>Megan McArdle: [Patty Barreiro’s second bankruptcy](http://www.scribd.com/doc/15752809/Patricia-Barreiro-2007-Bankruptcy-Filing) [in 2007] does not merely clear a lawsuit. The value of the settlement was $29,000. The total vale of the unsecured claims discharged was $55,313, inclding almost $8,000 for legal services, almost $10,000 in medical bills, $1200 in phone bills, $1100 owed to Comcast, and $5400 in credit card debt…. Andrews is saying that the lawsuit was the driving factor behind the bankruptcy, and that the other unsecured debts are therefore somehow irrelevant. But neither the book nor the bankruptcy filing indicate the means to clear the other unsecured claims without Chapter 7; by her own worksheets, she had very little income and their joint income was exceeded by their allowable expenses. Plus, of course, they’re awaiting foreclosure now…And [here](http://meganmcardle.theatlantic.com/archives/2009/05/the_road_to_bankruptcy.php).