Wallison: Still Wrong About Genesis of Housing Crisis | The Big Picture

Wallison: Still Wrong About Genesis of Housing Crisis | The Big Picture:

If you’ve been closely following the housing finance reform debate, you may have come across a pair of shrill blog posts penned by Peter Wallison, a senior fellow at the American Enterprise Institute and a Republican appointee to the Financial Crisis Inquiry Commission. He responded to my February 2011 article, “Faulty Conclusions Based on Shoddy Foundations,” which criticized the research underlying Wallison’s dissent from the majority of the members of that commission, and his contention that U.S. affordable housing policies caused the global financial crisis.

In these blog posts on The American Spectator’s blog on May 24 and on AEI’s blog on May 26, Wallison criticizes ”Faulty Conclusions” as “fallacious,” “fraudulent,” and “deceptive”; claims that it contains a “fake” chart; and describes the article as a “political screed.”

As I describe below, these accusations are baseless and distract from the fact that Wallison does not actually address the main arguments of “Faulty Conclusions.” Wallison does not contradict the claim that his FCIC dissent depends critically on the categorization of millions of home mortgage loans as “high risk” that are not actually high risk. Wallison also fails to answer other serious issues with his arguments that were pointed out in “Faulty Conclusions.”

I was watching Bill Maher the other night and John Fund was again blaming Freddie and Fannie (and low income people via the Community Reinvestment Act - the bastards!) for the great recession, and I was disappointed that Thom Hartmann didn't protest more vigorously. I found this article via Brad Delong's economics blog.


Basically, from the viewpoint of a non-economist, the guy flogging these claims was a minority of one, even with other Republicans on the Financial Crisis Commission, and one would think responsible conservatives would recognize the lack of credibility, yet this is the favorite meme among Fund and others who want to minimize the role of deregulation and crony capitalism for this mess.

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