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AAAintheBeltway

Registered: Oct 2001
Posts: 14600

04-18-12 05:43 PM

http://online.barrons.com/article/S...abs_article%3D1

Excellent interview. He points out the critical role of CRA and regulatory pressures on lenders to make bad mortgage loans in the market meltdown. Fro example, WaMu was required as a condition of a merger to make a huge amounts of such loans and to funnel money to ACORN and other groups. He also points out what a disaster the GSE sector was and how they are a far bigger problem than anything addressed in Dodd-Frank.

He also notes how D-F and particularly the Volcker Rule would have done zero to prevent the crisis.

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Martinghoul

Registered: Jan 2009
Posts: 5641

04-18-12 07:10 PM

I am not a defender of Dodd-Frank by any means. However, this interview contains a number of glaring problems that have been addressed a number of times. Calomiris has some interesting and meaningful things to say, but some of what he says is just disingenous and untrue. Specifically, the claims people like Calomiris, Wallison and Pinto have made regarding the role of the CRA have been shown to be completely unsubstantiated by evidence. Moreover, he completely misses the point of the Volcker rule. Same with Glass-Steagall.

Very disappointing. I would have expected a lot better from Prof Calomiris. Coming from someone who is supposed to be a serious academic economist, the interview is too much politics and not enough substance.

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Covertibility

Registered: Aug 2003
Posts: 3881

04-18-12 07:15 PM

This article, already being taken apart in the comments section, should start making the rounds in the blogosphere shortly. A good starting link to debunk this crap would be: Hey Mayor Bloomberg! No, the GSEs Did Not Cause the Financial Meltdown (but thats just according to the data).

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sle

Registered: Apr 2003
Posts: 1610

04-18-12 07:32 PM

Quote from Covertibility:
debunk this crap

Problem is that both articles are mostly political and neither do real analysis. The second one "uses" data to prove a political point, the first one uses some data-driven conjectures but neither hold water. It's clear the GSE did play a part in the whole mortgage mess, at least from the liquidity perspective.

The right thing to say is "it was everyones fault and everyone is suffering now and will suffer for a while" instead of the usual blame game.

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Covertibility

Registered: Aug 2003
Posts: 3881

04-18-12 07:36 PM

Quote from sle:

The right thing to say is "it was everyones fault and everyone is suffering now and will suffer for a while" instead of the usual blame game.

The second article is just a starting point. The data from there at least tells you it's not going to play the "it was everyones fault and everyone is suffering now and will suffer for a while" game.

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sle

Registered: Apr 2003
Posts: 1610

04-18-12 07:42 PM

Quote from Covertibility:

The data from there at least tells you it's not going to play the "it was everyones fault and everyone is suffering now and will suffer for a while" game.

A simple question - if GSEs were not warehousing any risk that turned out to be truly toxic, why did they blow up so spectacularly in 2008?

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