Saturday, May 19, 2012

History Is Bunk!

I was going to title this post "Shit Really Does Happen!" but I thought that might offend people. Instead, employing Ford's quote in an ironic way might make the main point more clear - events occur, things happen, things happened in a certain way, things happened because other things happened (albeit not in a simplistic cause/effect way; rather, there are relationships among various events that make sense). We can have debates and discussions over, say, the relative importance of the British enclosure laws on the growth of poverty and decline of religious practice because we are so far removed in time and space from the events in question that the weight and relevance of various matters are less clear. The financial collapse and the matter of regulating the financial industry, however, is not a process that occurred hundreds of years ago in a foreign country of which we know nothing. It is something that occurred within our lifetime, within the past few years. The documentation is both clear and available.

We had an inquiry commission that released a final report. I even wrote about it.

I was listening to NPR's Weekend All Things Considered - the website does not include a mention of the dueling interviews so I have no clue if I dreamed it or not - and there were back to back interviews with Rolling Stone writer Matt Taibbi, on his latest piece on the horror that is Dodd-Frank. 

Immediately after interviewing Taibbi, there was one with Peter Wallison, who, among other things, insisted there are "competing narratives" about the 2008 economic collapse, one involving the repeal of Glass-Steagall in 1998, the other seeing what happened as little more than one of the bumps in the business cycle that occurred, in part, because banks made a bunch of bad loans. I was wracking my brain while I was in the car, trying to remember why the name "Peter Wallison" was so familiar. I came home and discovered why.
T]he fourth dissenter, Peter Wallison - who uses his own dissenting report's title page for purposes of self promotion as ARTHUR F. BURN FELLOW IN FINANCIAL POLICY STUDIES, AMERICAN ENTERPRISE INSTITUTE, and helpfully appends his email address to the bottom of the page - wrote 98 page [dissent], all on his own! Right away, Wallison's dissent seems to contradict, in a fundamental way, the conclusion of the majority. Specifically, he places the onus of responsibility for the financial collapse not upon the myriad of factors sited by the majority, but to a single cause - the Community Reinvestment Act of 1977.
The post from which this comes offers competing "narratives" from the FCIC report. The differences could not be more striking. Wallison insists on defending a prior conclusion that it was a series of government policies that led, directly, to the economic collapse. The majority report, however, investigated the actual facts of the matter and concluded that, since the specific government-backed home loans were both a negligible proportion of the high-risk loans involved, and that these loans were less than half as likely to have gone in to default, there is no way they could have played any significant role in the economic crisis. Toward the end, I sum up what any sane person reading the competing reports would conclude:
So, the majority agrees with Wallison that housing policy was far too aggressive in its pursuit of ever-greater home ownership. Yet, this in and of itself hardly could have led to the other causes the majority noted as contributing causes - everything from lax corporate oversight to outright illegality, predatory lending practices, and the dismal failure of what little financial regulation was left. In this regard, citing federal housing policy, and in particular the Community Reinvestment Act as the prime, or perhaps even sole source, of the financial crisis disregards the rampant risk-taking, disregard for financial solvency and fiduciary responsibility, and outright criminality that is a part of the public record.(emphasis added)
"[P]art of the public record." A record, I might add, Wallison studiously ignores as he doggedly pursues the ever-elusive goal of proving that CRA was at fault. Now, NPR treats this fabulist to a solo spot interview in which he sings a completely different tune, inventing "competing narratives" as a way of showing how silly it is to have different views on what is, clearly, an open-and-shut case of too much government regulation. This flies in the face of ninety-four pages Wallison wrote not that long ago; it also flies in the face of the reality that no one that I know of has said there is some kind of direct connection between the 1998 repeal of Glass-Steagal and the financial collapse of 2008. I have said, on several occasion, this odd correlation of events is interesting; I think the evidence in the FCIC Majority Report, however, shows a far more complex, but far more chilling, case of a combination of idiocy, criminality, and simple incompetence within the private sector.

As a side note, it might have been nice if the folks at NPR had prefaced the interview with Wallison by noting that, as a member of the FCIC, he wrote a dissenting report that ignored significant and highly salient facts of the matter all the while pushing a case that was wholly false on the merits. Coming out now, saying an entirely different set of things - things, I might add, that bear no relationship either to the reality just a few short years ago, let alone in subsequent discussions of the events of late summer and early fall, 2008 - makes Wallison look, at least to me, not only like an ideologue, but a liar as well.

Ford was wrong. History isn't bunk. Especially when we have access to abundant material to discover what happened and even in some way why, this is important. People like Wallison play off a public that has largely forgotten not only the details of the events in question, but the subsequent investigation and conclusions by a committee appointed to find the sources of those events. If I had no conscience, I could go out in public and just make stuff up like that. It must be fun to get paid for it.

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