Over the past few years, it has become increasingly difficult to easily distinguish between genuine viral phenomena and astroturfing.

I had my suspicions several years ago, but it reached a head with the “Peter Schiff Was Right” video. Even before he announced he was running for Senator in Connecticut, I strongly suspected the heavily edited video was part of a PR offensive, one orchestrated by a Marketing/Public relations firm, designed to look like a grassroots effort.

What were the hints?

• Lots of emails from total strangers — all of whom had garbage (i.e., Hotmail) email addresses — none were from corporate emails;

• Very similarly worded messages; even where the language was not identical, the syntax was;

• Emails typically Blind Copy (BCC) recipients.

It happened again just last week. Lots of emails about this video regarding the FDIC liquidation of insolvent bank IndyMac, which was sold to bidders and renamed OneWest Bank (See The Indymac Slap in our Face. 02.08.10 http://www.thinkbigworksmall.com/mypage/player/tbws/23117/-4630).

The video was inflammatory, filled with accusations of inside dealings and taxpayer giveaways. The tone and background music is ominous, the math goes by too quickly — the entire thing comes across as if its a giant scam that was uncovered.

I noticed right away that many of the “facts” cited in the video were wrong or at best misleading (no, the FDIC is not funded with taxpayer dollars).

Before I wasted too much time fact checking, I looked at the source of video — a site called “Think Big Work Small.” The header on the page is titled “Video Marketing and Mortgage News Designed for Mortgage and Real Estate Sales.” They sell a product called Database Marketing 2.0. (See nearby graphic).

Hence, the obvious first errors combined with what these folks do for a living screamed AstroTurf to me.

I have no problem with self-promotion (‘though I choose not to use a PR firm). However, getting this many facts wrong as part of a campaign to create viral buzz to sell your product strikes me as cynical and sleazy. It was so inaccurate, it forced the FDIC to issue a statement with specific detailed facts about the OneWest transaction.

Entrepreneurs making money is what capitalism is all about. Its perfectly fine if companies want to buy insolvent firms from the FDIC (a competitive bidding process) and can make a profit on the purchase. And I cheer those folks with the savvy and chutzpah to buy distressed assets in the midst of a panic.

Imagine that, a profit on the purchase of distressed assets at a time when no one else wanted to assume the risk !

But Astroturfing in the middle of an enormous and complex political and economic problem? That strikes me as profiteering hucksters distorting hot button issues for personal gain.

That’s quite a difference from what the buyers of Indy Mac accomplished . . .

>

Sources:
Supplemental Facts about the Sale of Indymac F.S.B. to OneWest Bank
FDIC, 2/12/2010
http://www.fdic.gov/news/news/press/2010/onewest_lossshareb.html

FDIC Provides Additional Information on its Loss Share Agreement With OneWest Bank
FDIC, February 12, 2010
http://www.fdic.gov/news/news/press/2010/onewest_lossshare.html

Charges in Web Video Bring Unusual Rebuttal From F.D.I.C.
SEWELL CHAN
NYT, February 14, 2010
http://www.nytimes.com/2010/02/15/business/15fdic.html

Category: Financial Press, Weblogs

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

35 Responses to “Viral or AstroTurf ?”

  1. Because of this blog, I get tons of email from readers. Good ideas bubble up, and they usually end up as comments in the Reading or Open Thread posts. I recognize most of the names/email addresses from commentors and people I have corresponded with in the past. Emails come from domains like ML.com, Oppeneheimer.com, RaymondJames.com, etc.

    But when I start to get dozens of unsolicited emails for the same (fill in the blank) from strangers, my Spidey Sense starts tingling.

    Oh, with Schiff, I found out that his brother ran a PR firm.

    Game Over . . .

  2. BR,

    I’d think, by now, anyway, that we’ve all seen/read stories like these..
    http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=FDIC+reserves+insolvent

    with this: “(no, the FDIC is not funded with taxpayer dollars).” from above, in mind..

    Where is the FDIC going to go, for Funds, as these ‘Bank FAILS’ keep mounting?

    ~~~

    BR: You are describing a different story line — The credit crisis is so bad it has exhausted the FDIC insurance fund, raising the possibility of increased fees or a Treasury loan.

    That is quite a different story line than “LOOK AT WHAT THEY ARE DOING WITH YOUR TAX DOLLARS!”

  3. O, and past that, with this: “And I cheer those folks with the savvy and chutzpah to buy distressed assets in the midst of a panic.

    Imagine that, a profit on the purchase of distressed assets at a time when no one else wanted to assume the risk !”

    x2

    though, exactly, how open are those Auctions? Something tells me they’d get better Pricing/Price Discovery if they offered those ‘Assets’ as the Grand Prize of the Powerball drawing..

    but, hey, that’s just coming from who thinks that ‘Lotteries’ can have a positive Social impact, as well as a Financiial one..

  4. The Curmudgeon says:

    I cheer those folks with the savvy [internal connections] and chutzpah [implied government backing] to buy distressed [perhaps they have autism, the disease de jour] assets in the midst of a panic [engineered by those savvy folks with all that chutzpah].

    Just thought I’d clear that up for ya.

  5. Note that when Indy may failed in mid 2008, the crisis was ramping up, and few people wanted to buy into that mess. When this closed in March 2009 — at the peak of panic — who else was out buying banks?

    I have no problem whatsover with the group of buyers of this former Indy Mac garbage property making momney on the purchase — they put up the capital, took some risks, and are entitled to a gain.

  6. Trevor says:

    In this age of information, it’s remarkable how little time is taken to check facts, and how easily the medium has been perverted for selfish gains. Astroturfing is no different from U.S. politics (ads, talks shows, misleading speeches, etc.) of the past decade or so.

    Give me the dry, factual, staccato-like German or Indian news reporting of the style “this happened, that happened, and the other happened” (i.e. we can prove it) over “opinion and discussion” and “this should happen later” any day. I guess the real problem is that the audience simply does not know it is being manipulated, so it does not demand fact and excellence in reporting. We end with with what we (don’t) demand. No surprise, really.

  7. schmoo says:

    BR,

    Regarding astroturf, your post around this time last year got me wondering if the Tea Party was an astroturf operation:

    http://www.ritholtz.com/blog/2009/02/rick-santellis-faux-rant/

    I know that the claims made by Playboy which your post made us aware of were removed by Playboy and are unproven, but when I read this in TPM in renewed my suspicions:

    http://tpmmuckraker.talkingpointsmemo.com/2009/12/majority_of_tea_party_groups_spending_went_to_gop.php

    Does anyone else still suspect the Tea Party is an astroturf operation?

    Sarah Palin and those Tea Party folk scare the hell out of me.

    Peak Oil man Kunstler had a great observation about them that you may want to read if you haven’t already:

    http://kunstler.com/blog/2010/02/were-weimar.html

  8. dad29 says:

    Well, yah, but…

    “Taxpayers” do not pay FDIC premiums. It’s worse than that. Anyone with a bank account pays those premiums. I have three chilluns who pay FDIC premiums, but do NOT pay taxes. The video would have had even more impact if that were described accurately.

    And the FDIC statement merely asserts that SOME of the paper will give the purchaser a handsome reward, which we already knew.

  9. franklin411 says:

    Not surprising, considering Papa Schiff is a “guest” of the Federal prison system. =)

  10. DeDude says:

    The problem is that an underfunded FDIC cannot hold on to assets until the panic is winding down and prices are more reasonable. Until we get rid of this absurd fear of soci@lism and “we the peoples” gobinment, we will continue to pi$$ away taxpayers/citizens money straight into the pockets of our Wall Street masters. And we are at least as responsible for giving them these good deals as they are for taking it.

  11. deadonarrival says:

    “Entrepreneurs making money is what capitalism is all about. Its perfectly fine if companies want to buy insolvent firms from the FDIC (a competitive bidding process) and can make a profit on the purchase. And I cheer those folks with the savvy and chutzpah to buy distressed assets in the midst of a panic.”

    Normally, (strategically & operationally) the 2nd mouse takes the cheese…

    But also to consider in a case of reverse construction:

    - The cat takes the mouse
    - The dog takes the cat
    - The nurse takes the dog
    - The child takes the nurse
    - The wife takes the child
    - The farmer takes a wife

    Hi-ho, the derry-o…

    But remember, ALWAYS… THE EFFIN’ CHEESE STANDS ALONE. Long live the cheese!

    CV

  12. torrie-amos says:

    this is business as usual, been going on several thousand years, the fact is most don’t check facts even in this day and age, people don’t like math, lol

  13. johnborchers says:

    I would not be no quick to call the video wrong. When it comes down to saving the public the gov’t does typically lie to keep everything in order. Think about statements made by Bernanke, Paulson and the like about Subprime. They couldn’t tell the truth it would have made it worse.

    ~~~

    BR: Are you more comfortable with FACTUALLY INACCURATE than wrong ?

  14. deadonarrival says:

    “money straight into the pockets of our Wall Street masters. And we are at least as responsible for giving them these good deals…”

    I suppose they PAID for this right by financing the campaign of the winners…

    When the current cast of winners is… um… CAST (as in, “out”)… Then, no doubt, they’ll finance the campaigns of the other side (who will reward them with the same benefits)…

    The only gullible ones are the voters themselves who bought into the rhetoric of either side in the first place…

  15. There goes Barry seeing ‘patterns’ in randomness again. ;)

  16. Onlooker from Troy says:

    The fact that the FDIC is funded by banks and not by the taxpayers is true. But as MEH infers, what would/will happen when the house of debt cards finally implodes and overwhelms that banks’ ability to bail themselves out?

    It’s absurd to think that the taxpayer isn’t on the hook as the ultimate payer. It’s worse than thinking that the implicit guarantee of FNM/FRE debt wouldn’t become an explicit guarantee. We know how that one turned out.

    With that said, it is better to outline the full truth and explain the implications of the FDIC guarantee scheme, than to misrepresent it as is apparently done in this case. It always undermines your arguments to play fast and loose with the facts, even if the larger truth is in your corner.

  17. or, differently, BR, w/this: “The video was inflammatory, filled with accusations of inside dealings and taxpayer giveaways. The tone and background music is ominous, the math goes by too quickly — the entire thing comes across as if its a giant scam that was uncovered…”

    it seems that you’ve been reading some of this..
    http://www.websitemagazine.com/content/blogs/posts/pages/10-simple-steps-to-creating-effective-web-video.aspx
    “…Why should you be using video on your websites? Video is highly persuasive, and users have come to expect it. A well-produced video can deliver your message in a way that engages and persuades visitors to take an action that you specify. For example, my weekly WebTV show (www.HelpMyBusiness.com) attracts thousands of new viewers each week, many of whom buy various products and services I recommend to them. You can do something similar for your niche, regardless of your industry.

    The number one key to creating an effective Web video is simple: Preparation. Unfortunately, most people dive in head first and end up with an awkward, disjointed mess. Preparation might not be the most fun part of the process, but it is critical to success.

    Here’s a simple, 10-step process you can follow to ensure an effective Web video: ..”
    About the Author: Watch Andrew Lock’s highly entertaining weekly WebTV show, “Help! My Business Sucks!” at http://www.HelpMyBusiness.com.
    ~~
    pray tell, have you been cogitatin’ on BRIPTV?

    and/or, are you, just, flabber-flippin’-gasted by eventualities, like:
    http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=get+paid+to+tweet+twitter+facebook+whore

    which, you know, instead of running ads for OSTK, you could ‘brew your own’ ad rev./rec.’d products/provisioners/cohort demand aggregation servicio ..

    just wonderin’ ~

  18. Moss says:

    Parasitism applied to economic, social and or political conditions, otherwise know as exploiting.

    See also Tea Party, Peal Oil, War on Terror, War on Drugs, Preachers of Prosperity, Schiff for Senate, Kudlow for Senate, yada yada.

  19. Darmah says:

    We are no longer in an “Information Age.” We are in the Age of Noise. Falsehoods, half-truths, talking points, out-of-context video edits, plagiarism, rewriting of history (U.S. was founded as a Christian nation, for example), flip-flops, ignoring facts (Cheney and torture for example), neatly packaged code words and phrases, media ratings focus, dysfunctional government (fillibusters have more than doubled, but most don’t realize Republicans are blocking everything), mainstreaming fringe causes….I could go on and on.

    Is it any wonder why so many who are struggling with kids, jobs, rising medical costs, etcetera have such a tough time wading through all the crap?

    ~~~

    BR: Revenge of Agnotology !

  20. jjay says:

    Re: FDIC Video
    The larger issue is that as citizens we have become so accustomed to government corruption scandals, we are ready to believe the worst at all times. Why would the Fed fight an audit tooth and nail if there was nothing to hide? Who audits Fannie, Freddie, HUD, or the FDIC for that matter? Lincoln Savings and Loan anyone?

  21. Lugnut says:

    From the NYT article

    “A judge in Riverhead, N.Y., went so far as to cancel a Long Island couple’s loan obligation in November, saying OneWest, which was the loan servicer, had failed to cooperate in efforts to avoid foreclosure and calling the bank’s actions “harsh, repugnant, shocking and repulsive.”

    The video picks up this theme, stating, “The next time you ask yourself why is it so hard to get a loan modification, the answer is because there’s too much money to be made with short sales and foreclosures.”

    The video may be of dubious credibility, but that last statement has the ring of truthiness to it. I’d welcome any cogent argument to the contrary. One only needs to look at the (miniscule) amount of loan mods done after the .gov threw money at the banks for that very purpose to at least raise the question. Banks only do what either makes money or minimizes losses. If it helps the customers or pleases the government regulators, it’s usually only by coincedence.

  22. We discussed that case back in November:

    Judge Voids Mortgage Due to Bank’s “Bad Faith”
    http://www.ritholtz.com/blog/2009/11/judge-voids-mortgage-due-to-banks-bad-faith/

  23. StatArb says:

    Charlie Gasparino – - – - your buddy ?!?!?!? — going to Fox Business , will be announced soon

  24. franklin411 says:

    @statarb
    Yay! I can’t stand Gasparino…what a douchebag!

  25. Donald says:

    (no, the FDIC is not funded with taxpayer dollars).

    Technically no, but aren’t the costs passed on to consumers in the form of bank fees?

  26. Scott F says:

    How is what these sleazoid marketers do any different than the most extreme wing nut behavior?

    I have to single out the right, because they have raised this to an art form: Michelle Malkin and Ann Coulter because they seem to be the most shameless practioner of the art of media whoredom, saying anything outrageous to generate attention book sales, and media spots. To these shameless hucksters, Truth is irrelevant, book sales and speaking fees are all that matter . . .

  27. I don’t follow Malkin much, and I gave up on the Shrill Blond Harpy and her massive projection a long time ago.

    But I always recommend these classic 2005, Not Safe For Work pages for any fan of Coulter:

    http://tinyurl.com/IFANNCITAH

    and

    http://tinyurl.com/BIACASA

    Enjoy . . .

    ~~~~

    REPEAT: These pages are Not Safe For Work

  28. BR,

    this: “You are describing a different story line — The credit crisis is so bad it has exhausted the FDIC insurance fund, raising the possibility of increased fees or a Treasury loan.”

    is, actually, it’s own story line, one that skips over the fact that the FDIC, as an ‘insurance’ fund, never bothered to raise its ‘premiums’–ahead of the, obviously, oncoming storm–rather, it choose the ‘profit enhancing’-tack, for the ‘banks’, anyways, of ‘steady-as-she-goes’..(hmm, they, even, in fairly recent history, reduced them?)

    with its own ‘tummy-chuckler’ of a euphemism ‘Treasury loan’, thrown in..

    no matter, you’re point–”The orig. vid. was sloppy/loose with the facts”–is *True enough (for what is Seen..)

    others have, already, noted some of the costlier aspects, of ‘what is Unseen’, of the dynamic that is being illuminated..
    ~~

    speaking of illumination/ in order to be clear, above, with this: ” http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=get+paid+to+tweet+twitter+facebook+whore

    which, you know, instead of running ads for OSTK, you could ‘brew your own’ ad rev./rec.’d products/provisioners/cohort demand aggregation servicio ..”

    I wasn’t suggesting that you begin “Facebook whoring”, instead of running ads for OSTK, BBY, et al..

    I was suggesting that..by utilizing “WebVideo/IPTV” that you could engage your readership–that has made it clearly known that they appreciate your “straight-forward/no B***-S*** POV”–and, with their input, begin creating a “‘brew your own’ ad rev./rec.’d products/provisioners/cohort demand aggregation servicio”..

    Here’s betting that you would find it more rewarding, your readership/viewership would find it more compelling/useful, and both parties would find products/provisioners that neither had heard/thought of before..(yes, speaking of ‘Cheddar’, there, really, can be a WWW on the www. ..)

    but, as always, at the EOD, it’s: “Differin’ Opines, Make’m run the Equuines”

  29. Dennis says:

    Dude,

    Those Coulter links are frickin hysterical !

    How have I never read that shit before?

    My stomach still hurts — Unreal

  30. MinnItMan says:

    Ok, the Ann Coulter thing is about as funny as it gets – saw it years ago. Nonetheless, I think Schiff deserves some contrarian cred. The biz press/punditry are opiated tools, and Schiff was invited for comic relief. What’s comic now are his foils. To my mind, the only thing wrong with what he’s said is that for 30 years, we assumed inflation was an easy policy choice, that is, reflation will inexorably lead to inflation, and that the powers that be will eventually use this trick. It’s not clear to me (or the gold market) that it’s that simple. So Schiff may be wrong about that. If you could point out where Schiff changed positions, or was especially un-Schiff-like (that is, not rigid, personable, er, political), your post would make more sense.

  31. arthur.i says:

    We live in the land off Propaganda. It will only increase. Thanks for pointing this out.

    If you haven’t already seen this great propaganda tool…:

    http://en.tackfilm.se/?id=1266299751069RA23

    My two cents worth, Mr. Ritholtz – take on a good PR firm.

  32. Bernie X says:

    I think this is the original author who pieced together why his client’s OneWest short sale wasn’t approved:
    http://www.familysecuritymatters.org/publications/id.5510/pub_detail.asp

    Basically OneWest will make more from the FDIC by foreclosing than they will by loan modification or short sale.

  33. jimc1004 says:

    FDIC only did what it is supposed to do, auction off failed banks.

    FDIC did not make IndyMac fail!
    [It is really frustrating that I even feel I have to point this out
    but the mis-information campaign is extremely well funded, and shrill].

    Bubbles and speculation will always be with us, but bubbles rooted in the financial sector, and the deep and long lasting recessions they cause, are particularly destructive because without a working banking system it is much harder for the non-financial sectors of the economy to grow and pull us out of the
    recession.

    It takes shady bankers, and lots of leverage to create a mess like IndyMac.

  34. [...] attention. As the web continues to saturate and it becomes more like the real world it will only get more absurd. We are no longer in an “Information Age.” We are in the Age of Noise. Falsehoods, [...]

  35. [...] attention. As the web continues to saturate and it becomes more like the real world it will only get more absurd. We are no longer in an “Information Age.” We are in the Age of Noise. Falsehoods, [...]