A Carney-Ritholtz CRA debate?

By Felix Salmon
June 29, 2009
" data-share-img="" data-share="twitter,facebook,linkedin,reddit,google" data-share-count="true">

Has John Carney found a backer for a public debate with Barry Ritholtz over whether the Community Reinvestment Act was significantly to blame for the credit crisis? Barry wants the loser to pay the winner “any dollar amount between $10,000 up to $100,000″, which could make it very interesting. (And I think it’s only fair to ask that Carney put up at least some of his own money.)

The tough thing, of course, will be finding “a fair jury”, but I don’t think that will be insurmountable. I will be happy to help out in any way I can, although of course I make no claims to impartiality.

Update: Carney’s serious about taking Ritholtz’s bet, and is asking for backers.

Update 2: Barry has updated his post to say that Carney’s plea for backers isn’t kosher, but he’s leaving the door open if Carney can come up with “something of comparable (non-monetary) value”.

11 comments

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/

There ought to be a few well heeled Fox News blowhards with a CRA jones who would back Carney.

Posted by bdbd | Report as abusive

The other tough thing will be agreeing in advance to a definition of “significantly to blame”, which could range all the way from “primarily to blame” to “having any statistical significance at all”.

As Jonathan says, how you define blame will be key to the debate. Will it be preponderance of evidence, or beyond a reasonable doubt? And how do I volunteer for jury duty?

Well I’ve been practising for years and just know I can urinate further than either of them.

Posted by otto | Report as abusive

I dunno.

A traditional debate favors Carney, because Carney would be able to get by on rhetoric and handwaving, which is all he has to go on. Barry has the numbers to back himself up, but oral debate is a poor venue for putting forward numeric data. The audience’s eyes glaze over and they side with the guy making the emotional appeal.

Posted by Jon H | Report as abusive

Carney’s “takedown” of the arguments is pitiful.

But what’s most hilarious is how Carney wants to structure his bet – he doesn’t want to put up much money himself (although he is generous enough to offer the “bulk of the upside” to his sponsor). In short, he wants to play by Financial Sector circa-2005 rules – lots of leverage, very limited downside.

And yet he claims not to have “anything like” $10,000.

Not a lot of conviction there.

Posted by Paul | Report as abusive

@Jon H

It’s funny that anyone could read Barry’s post and Carney’s post and think Carney’s the one arguing on bluster, handwaving and emotion.

“It’s funny that anyone could read Barry’s post and Carney’s post and think Carney’s the one arguing on bluster, handwaving and emotion.”

Numbers, Joe. How about some numbers?

Posted by Jon H | Report as abusive

@Jon h

What does that even mean?

Let’s see: Carney admits that the CRA loans aren’t; in fact, they outperform the generic 30-year-Fixeds. And he concedes that they aren’t either (a) a large part of the market or (b) of large notional values.

So the “significance” test isn’t going to pass any reasonable threshold even in normal times–and is likely even lower for the 2004-2007 range.

Meanwhile, the optimistic version in the market is that MBSes are trading ca. 30-50 cents on the dollar. You don’t get there with a ca. 1% default rate.

Does Carney play poker? And does he have backers for that?

barry says if cra was the problem, then cra banks should be first and most in the bad loan dept.
this requires one to believe that mortgage brokers don’t know what’s going on in the market and aren’t interested in getting a piece of the no doc loan action until the cra banks have had a nice long non-competitive crack at it.
only idiots that don’t know how markets work believe that.

Posted by yo | Report as abusive