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”.
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11 comments so far
There ought to be a few well heeled Fox News blowhards with a CRA jones who would back Carney.
- Posted by bdbdThe 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”.
- Posted by Jonathan LundellAs 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?
- Posted by James CullenWell I’ve been practising for years and just know I can urinate further than either of them.
- Posted by ottoI 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 HCarney’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@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.
- Posted by Joseph Weisenthal“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@Jon h
What does that even mean?
- Posted by Joseph WeisenthalLet’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?
- Posted by Ken Houghtonbarry says if cra was the problem, then cra banks should be first and most in the bad loan dept.
- Posted by yothis 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.