Comments on: A Carney-Ritholtz CRA debate?

By: yo

yo — Wed, 01 Jul 2009 15:10:33 +0000

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.

By: Ken Houghton

Ken Houghton — Mon, 29 Jun 2009 23:56:38 +0000

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?

By: Joseph Weisenthal

Joseph Weisenthal — Mon, 29 Jun 2009 20:50:20 +0000

@Jon h

What does that even mean?

By: Jon H

Jon H — Mon, 29 Jun 2009 20:43:22 +0000

“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?

By: Joseph Weisenthal

Joseph Weisenthal — Mon, 29 Jun 2009 18:32:11 +0000

@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.

By: Paul

Paul — Mon, 29 Jun 2009 15:46:59 +0000

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.

By: Jon H

Jon H — Mon, 29 Jun 2009 15:31:03 +0000

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.

By: otto

otto — Mon, 29 Jun 2009 14:55:17 +0000

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

By: James Cullen

James Cullen — Mon, 29 Jun 2009 14:32:03 +0000

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?

By: Jonathan Lundell

Jonathan Lundell — Mon, 29 Jun 2009 14:22:33 +0000

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”.

By: bdbd

bdbd — Mon, 29 Jun 2009 14:19:23 +0000

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