Bailout

Beef of the day: Wallison vs Nocera

By Felix Salmon

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.

Full post as published by Macroprudential on December 20, 2010 (boomark / email).