Who's the liar?

As mentioned in a recent post, Karen Street of PolitiFact/Facebook/commentary infamy has started a blog that occasionally attempts to tackle an occasional of my Sublime Bloviations.  And that blog is not the place to publish this type of play time.

The subject:  The second in Street's fledgling series "Lil' White Lies," which affords us yet another opportunity to ask:  Where's the supposed lie?

Street had her answer to the first post in the series via a comment to her blog.  She has eradicated blog commentary in her domain, so that's the end of that conversation.

The second in the series concerns a criticism I made of Robyn "Blumñata" Blumner, editorial columnist extraordinaire at the St. Petersburg Times.  Blumner plays ventriloquist's dummy for Barry Ritholtz, who argues that the Community Reinvestment Act was not a significant factor in the subprime mortgage crisis.  I posted my disagreement with Ritholtz's thesis and referred readers to the work of John Carney for further explanation/exploration.

Street took issue:

The basis of Bryan’s contention of Blumner “buying” Ritholtz’s faulty reasoning was a critique by John Carney of Business Insider. This is the John Carney who wrote this article at the website American Conservative where he stated “We’re the backbench of a minority.”

A)  The basis of my contention was not Carney's work but the fact (plainly expressed by me) that many subprime mortgages are not at the same time CRA loans, so Ritholtz reasoning that CRA banks would more often fold as the crisis deepened is, in logical terms, a non sequitur based on a faulty premise.

B)  Perhaps Street wants to imply that getting published in the American Conservative makes Carney right-wing enough to discredit his arguments.  Perhaps that's why she neglected to mention that Carney's article in the American Conservative attacked the relative lack of content in the typical bestselling books by conservatives such as Mark Levin, Glenn Beck and Sean Hannity.  If that was not Street's intention then it is difficult to discern a useful purpose in her second sentence above.

But did John Carney actually “specifically debunk Ritholtz’s objection”?

"(D)ebunk" is obviously my judgment, and I stand behind it based on what is written above and in my original post.  Carney wrote in response to (Barry) Ritholtz on the same issue Blumner mentioned in her column:

As much as I respect Barry’s formidable analytical powers, I’m afraid he’s taken too narrow of the view of the matter. His question is far easier to answer than he suspects.

Street offers no reasonable evidence to refute Carney's argument (or mine, for that matter).

He supposedly “debunked” it with three points as to how the CRA created more lax lending standards which “spread” to other lenders…I will try to address each point.  Here you can also read a little more about Carney's "bizarre crusade" against the CRA.

Before moving on to see how Street tries to deal with Carney's argument, it's worth noting her attempt (probably the second such) to discredit Carney with irrelevant attacks.  She also posted the incorrect link to Carney's three points (rookie bloggers ...).  The right one is here.

Three points:

1)  Street claims (minus citation) artificial demand for subprime loans would have required more regulation by the Bush administration (non sequitur; ignores long-term development of the subprime market).  She adds (again without citation) that the Office of Thrift and Supervision was a "'captured agency'" preventing (for example) that type of regulation (captured for how long?).  Finally, she cites Bhutta and Canner claiming that CRA loans accounted for an insufficient percentage of loan sales in 2006 to have significantly influenced the crisis.  But that simply misses the thrust of Carney's argument and again ignores the long term nature of the growing subprime market as well as Carney's bond sales argument.  Street employs a kind of MXC/wall buggers argument:  Have Japanese people covered in velcro rope-swing at a velcro-covered wall and hope one of them sticks.

2)  Street handwaves Carney's point that the threat of regulation may have similar effects to regulation by repeating her unsupported claim that bankers were not concerned with regulation during the Bush administration.  That notion overlooks the obvious fact that Bush only served four years at a time.  Banking behavior that creates a ruckus always draws the attention of government, even if the legislation or regulation is as much as four years away.  It also overlooks the fact that Congress wields more power than the presidency.  Witness the fact that TARP, enacted under Bush, placed a heavy federal hand on banks.

3)  Street needs to learn that it counts as plagiarism to quote material verbatim without in some clear manner acknowledging that it comes from somebody else.  Street uses an unattributed quotation of Carney then follows with another non sequitur:

This means that the banks should have led the way and started the subprime offerings earlier than the mortgage companies. According to Mike Konszal, financial engineer, “I’ve never seen a data set that pass[ed] this hurdle.”

Konszal obviously needs to assume that Carney's "quickly" needs to be slow enough to permit his proposed measure to detect the difference.  Konsal achieves that by adding straw-filled limbs to the body of Carney's argument, resulting in a Frankensteinian straw man.

Add it all up and tell me:  Who's the liar and where's the lie?



Sept. 9, 2010:  Removed a redundant "attempt" in the paragraph preceding "Three points."