In his latest rendition, Barry Ritholtz illuminates the sad state of dialog that is originating from the Koch family funded professor in our UC System. More importantly, it highlights the key issue with any discussion about financial reform: some people are still intentionally ignoring the facts. For example, Peter Wallison, of AEI ilk -- a corporate financed think tank -- and by proxy, Professor Dwight Jaffee (UC Berkeley), are still perpetuating the same lies about the root cause of the subprime crisis of 08.
Professor Jaffee likes to exclude from his "disclosures," as he criticizes Fannie Mae and Freddie Mac's affordable housing policies, his background with Mercatus, an anti-regulatory policy supporter, and Koch Family funded group of hooligans. Forget for a moment that they are funded by the Koch Family. The data that stemmed from Willison's report, and later supported by Professor Jaffe during financial services hearings, is clearly based on a manipulation of the underlying data/facts/truth, which Jaffee took no effort to validate on his own (but is it really so hard to see why he didn't validate the data when he's affiliated with Mercatus, deregulation lobbyist groups, and the Koch family?)
Wallison’s argument, which places most of the blame on the affordable housing goals of the former government-sponsored enterprises Fannie Mae and Freddie Mac before they fell into government conservatorship in 2008, also ignores the actual delinquency rates. As David Abromowitz and I noted in December 2010:
“Mortgages originated for private securitization defaulted at much higher rates than those originated for Fannie and Freddie securitization, even when controlling for all other factors (such as the fact that Fannie and Freddie securitized virtually no subprime loans). Overall, private securitization mortgages defaulted at more than six times the rate of those originated for Fannie and Freddie securitization.
As Phil Angelides, chairman of the FCIC, has stated, “The source for this newfound wisdom [is] shopworn data, produced by a consultant to the corporate-funded American Enterprise Institute, which was analyzed and debunked by the FCIC Report.”