Beef of the day: Wallison vs Nocera

By Felix Salmon
December 20, 2010
Joe Nocera aimed a well-deserved broadside at Peter Wallison, one of the Republican commissioners seemingly doing their best to scupper the work of the Financial Crisis Inquiry Commission. He said that Wallison's theory of the genesis of the financial crisis is "not, as they say, reality-based", and noted Wallison's idiosyncratic defense of his position:

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On Saturday, Joe Nocera aimed a well-deserved broadside at Peter Wallison, one of the Republican commissioners seemingly doing their best to scupper the work of the Financial Crisis Inquiry Commission. He said that Wallison’s theory of the genesis of the financial crisis is “not, as they say, reality-based,” and noted Wallison’s idiosyncratic defense of his position:

Mr. Wallison said he had seen documents, not yet made public, as part of his work with the financial crisis commission that would prove that he’s right and I’m wrong. Well, we’ll see.

This is silly: if Wallison had smoking-gun documents proving Frannie’s culpability in the crisis, I’m pretty sure we’d've seen them by now. Nocera and his co-author, Bethany McLean, have done a lot of digging into Frannie, and for the time being I’ll trust Nocera that such documents simply don’t exist.

But Wallison isn’t giving up, and has responded today with a blog post entitled “Joe Nocera’s Hypocritical Attack.” He adduces no hypocrisy in what Nocera writes. But he does repeat that he has a super-secret stash of documents which will back up his case:

The primer that I and three of my Republican colleagues signed sought to outline the major issues that we thought the Commission should address. It was not a reply to or a dissent from the report of the Democratic majority, which is still a work in progress. It was issued on December 15 because that was the date on which, under the law that established the Commission, its report was supposed to be issued, and the primer was released in recognition of this statutory deadline…

In our conversation as he was writing this article, he told me that his reporting “has shown that Fannie Mae and Freddie Mac simply followed Wall Street” into buying subprime and other risky loans. I told him this was wrong—that as part of the Commission’s work I have seen internal documents from Fannie and Freddie that show this particular mantra of the left to be a myth. For a reporter, that would have been a signal to hold his fire—a warning that there were facts out there of which he was unaware. I was telling him he should wait and see what I might write in connection with the Commission’s report.

This isn’t even internally consistent. If Wallison wanted to release his report in time for the December 15 deadline, why wait until January, long after that deadline passes, to reveal these facts? More to the point, Nocera has researched the financial crisis in detail—to the point of publishing an entire book about it—and has a job, as a newspaper columnist, where he’s meant to publish his opinions on the causes of the crisis. There’s no way that he should hold off on doing so just because a Republican hack like Wallison hints that he might have new information.

Indeed, Wallison’s language here shows just how weak his smoking gun is likely to prove: note that he talks about “what I might write in connection with the Commission’s report.” The word “might” is weaselly enough; the word “I” is the biggest giveaway, however — since if there really were compelling new information here, “we” would surely be writing it up in the main body of the report, instead of shoving it off into a Wallison-penned addendum.

Still, it’ll be interesting to keep an eye on Wallison’s blog after the FCIC report is published. Maybe then he’ll come clean, and point out exactly what information he thinks will change Nocera’s mind.

6 comments

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Secret documents?

Let’s give this guy the “Joe McCarthy of the 21st century” label.

Posted by MarkWolfinger | Report as abusive

The Republicans are truly the party of anti-intellectualism. A poll came out today that showed 52% of all Republicans believe in strict creationism, that mankind has only been here 10,000 years and that evolution is not valid. Add this to the hare-brained Republican mantra that global warming is not true and you have a scary number of ignorant people populating the Republican party. Sarah Palin is emblematic of the type of morons we are now seeing surface in the Republican party. It’s a circular firing squad and the Republicans are all crack shots! Mark Montgomery NYC, NY boboberg@nyc.rr.com

Posted by boboberg | Report as abusive

Carney’s certainly fellating him, Felix.

That’s why he has a job with a major television network (well, the merger of NBC and the letter “C”) and you’re still slaving away in print.

Posted by klhoughton | Report as abusive

I am not entirely sure these two people are not talking past each other. If Mr Nocera is saying Mr Wallison is saying in absolute terms that Frannie were involved in subprime before Wall Street then Mr Wallison is obviously wrong as there were subprime securitisations long before Frannie got involved. However, it is not clear to me that Mr Wallison is saying that, rather that Frannie got involved in sub-prime bubble two, post 2000.

Also Mr Nocera seems to forget that interest-rate DID pose a big threat to Fannie some years ago and in fact caused a big accounting scandal. It was lucky to have it undercovered after the accounting panics of 2002-2003 otherwise it might have ended up in “conservatorship” back then.

It is strange that Mr Wallison took on Mr Nocera’s more nuanced take when at the same time ignoring Ms Mclean. Maybe, quite rightly, he considered her article beneath contempt.

Either way, given the costs to the US taxpayer, the damage these companies did do and could have done surely putting them front and centre is an unalloyed good thing. Ditto, focus on the repo market.

Posted by Danny_Black | Report as abusive

What makes it even stranger, is that the book these two journalists wrote was in my opinion one of the best books written about the crisis and it certainly does not shy away from Frannie. The main thing it misses is the people who were driving the demand – ie the buyside.

Posted by Danny_Black | Report as abusive

Merry Christmas all.

I agree that Wallison has taken or implied fundamentally the wrong attitude toward public debate. As I said in my blog, “If Nocera were writing about the causes of the outbreak of the American Revolution in 1775 it might be the case that there are still as yet unknown documents somewhere. That is not a signal to ‘hold one’s fire.’ Indeed, it should be an incentive to fire away — it may help in smoking out the new stuff.”

For my more complete discussion:

http://cfaille.blogspot.com/2010/12/fann ie-freddie-joey-and-petey.html

Thanks.

Posted by Christofurio | Report as abusive