Joe Nocera will soon apologize for writing this, presmuably:
You begin with a hypothesis that has a certain surface plausibility. You find an ally whose background suggests that he’s an “expert”; out of thin air, he devises “data.” You write articles in sympathetic publications, repeating the data endlessly; in time, some of these publications make your cause their own. Like-minded congressmen pick up your mantra and invite you to testify at hearings.
You’re chosen for an investigative panel related to your topic. When other panel members, after inspecting your evidence, reject your thesis, you claim that they did so for ideological reasons. This, too, is repeated by your allies. Soon, the echo chamber you created drowns out dissenting views; even presidential candidates begin repeating the Big Lie.
Thus has Peter Wallison, a resident scholar at the American Enterprise Institute, and a former member of the Financial Crisis Inquiry Commission, almost single-handedly created the myth that Fannie Mae and Freddie Mac caused the financial crisis. His partner in crime is another A.E.I. scholar, Edward Pinto, who a very long time ago was Fannie’s chief credit officer. Pinto claims that as of June 2008, 27 million “risky” mortgages had been issued — “and a lion’s share was on Fannie and Freddie’s books,” as Wallison wrote recently. Never mind that his definition of “risky” is so all-encompassing that it includes mortgages with extremely low default rates as well as those with default rates nearing 30 percent. These latter mortgages were the ones created by the unholy alliance between subprime lenders and Wall Street. Pinto’s numbers are the Big Lie’s primary data point.
Very shrill, I’m sure PolitiFox would not approve. Early contender for 2012 lie of the year?
PeakVT
Barry Ritholz at The Big Picture has been waging war on the Fannie/Freddie lie for months (years?). It’s good to see a journalist joining in.
dance around in your bones
You know, I have heard this Fannie Mae/Freddie Mac BS repeated ad nauseum by I don’t know HOW many people…it’s difficult to refute because ‘they’ don’t want to listen to actual facts. It’s frustrating as all get-out.
Si, fucking Lie of the Year.
sfinny
Scarily, I’ve heard this big lie and the related lie that the crash was due to the CRA from several clients, who are bankers.
Jesus H Tapdancing Christ
Newt had his fat fingers in the Freddie/Fannie cookie jar. You might think that fact might give these wingnut ideologues pause. Oops, I forgot: They’re shameless lying douche nozzles.
dmbeaster
I don’t know why this particular lie is so disturbing, given all of the other odious right wing lies. It demonstrates anything meaningful about economic policy is impossible with these people. It is the equivalence of lying about the causes of a dangerous disease so that one can continue to indulge bad behavior.
MikeJ
@sfinny: Freddie Mac burned down the Reichstag.
Villago Delenda Est
@MikeJ:
Freddie Mac was on the grassy knoll.
Freddie Mac was seen swimming away from the USS Maine
Fannie Mae gave the Lincolns the tickets to Ford’s that night.
Fannie Mae instigated the defenestration of Prague.
dance around in your bones
Freddie Mac and Fannie Mae were lovers
Oh lordy, how they could love
Swore to be true to each other
Just as true as the stars above
He was her man, but he done her wrong
Well, Fanny Mae went down to the corner
To get a bucket of beer
She said to the fat bartender
“Has my lovin’ Freddie Mac been here?
He was my man, I think he’s doing me wrong”
“Well, I don’t want to cause you no trouble
And I don’t want to tell you no lies
But I seen your man about an hour ago
With that high-browed Nellie Bly
He was your man, I think he’s doing you wrong”
She took a cab at the corner
And said “Driver step on this can
For you’re looking at a desperate gal
Been two-timed by her man
He was my man, but he done me wrong”
Then Fannie Mae went home in a hurry
She didn’t go there for fun
Fannie Mae went home to get a-hold
Of Freddie Mac’s shooting gun
He was her man, but he done her wrong
Fanny Mae peeked over the transom
And there to her surprise
She saw her lovin-man Freddie Mac
With that high-browed Nellie Bly
He was her man, and he was doing her wrong
Then Fannie Mae pulled back her kimono
And she pulled out a small .44
And root-e-toot-toot three times she shot
Right through that hardwood door
He was her man, but he done her wrong
“Well roll me over on my left side
Roll me over so slow,
Roll me over on my left hand side, Fannie Mae,
Them bullets hurt me so,
I was your man, but I done you wrong”
Now, bring round your rubber-tired buggy
And bring round your rubber-tired hack
I’m taking my man to the graveyard
I ain’t gonna bring him back
He was my man, but he done me wrong
Well this story has no moral
And this story has got no end
Well the story just goes to show you women
That there aint no good in men
He was her man, but he done her wrong
R Johnston
When you reflexively compromise between “tire rims and anthrax” and a fine Italian dinner, you end up associated with tire rims and anthrax.
Brandon
When I read to here, I thought was just going to start unloading on Friedman or any other number of assorted wankerific columnists. Because I had always assumed that this was how modern journalism worked.
Jerzy Russian
@Jesus H Tapdancing Christ:
I love your handle. I presume the “H” is for “Hussein”?
On the topic of the post, that Nocera piece is a very clear write-up how bullshit ideas make it into the mainstream.
Ilia
This title reminded me of Huntsman’s lame joke about Mitt Romney’s book “No Apologies.”
That is all.
wasabi gasp
preshmooably
catclub
@wasabi gasp: + how many?
I saw that, too.
I also second that Barry Ritholtz has a page I have bookmarked ‘get me re-write’, on the subject. I think this one is so frustrating because all the points that show there is no way fannie and Freddie did it are incredibly logical, and it takes active ignorance to keep saying they did it.
elmertfudd
The “H” is for Horatio. ;)
Lee
I thought the ‘H’ is for Hellraiser.
I always go with a question to help refute my teatard friends that blame Freddie/Fannie.
“How did approximately $200b in bad losses remove multiple trillions from the economy?” They never have an answer. So I kindly point out that it was not Freddie/Fannie but the unregulated derivative market. I also point out that for the current cost of the bank bailout we could have purchased all the bad mortgages and we would STILL have had the financial crisis because it was not Freddie/Fannie but the aforementioned derivative market.
WereBear
@Lee: In part, they believe such crap because they don’t know how anything works. Financial markets? Accounting? Derivatives? Giant Turtles? It’s all the same to them. Incomprehensible.
This is how all their lies make it into the Main Stream.
When the institutions of the US refused to give their crap any more room; when Goldwater crashed and burned like the Hindenberg; when the life motto “Be More like Scrooge” seemed to be losing its luster; they co-opted and created their own institutions; their own media, think tanks, even religion.
SW
What do the St. Petersburg Bloggers say about this?
mining city guy
I don’t disagree with any of the comments here and I particularly like and endorse dmbeaster’s comment at No.5. But I also think that conservatives want to blame Freddie Mac and Fannie Mae because they are GOVERNMENT sponsored enterprises.It therefore becomes easier for them to accept the lie that Freddie Mac and Fannie Mae almost single- handedly caused the financial crisis because it fits with their world view that the government can’t do anything right. By blaming Freddie Mac and Fannie Mae they can proceed with the argument that the “government” has to get out of the way so that the “free market” can work its magic.
azlib
@mining city guy:
We already saw what happens when the government gets out of the way. It is called the Great Recession.
4jkb4ia
Yes! I took one look at the first paragraph and said, “That is incredibly nasty for Joe Nocera”. The rest of the column did not disappoint.
It is a tribute to Wallison’s complete monomania that he rated a column like that.
No. Because it is, once again, a tribute to Wallison’s complete monomania that he couldn’t even get the people on the FCIC, much less anyone who is capable of being objective about Fannie and Freddie, to believe him. This is much less subtle than the difference between Medicare and Medicare as we know it. The Big Lie here is just Wallison’s being wrong.
4jkb4ia
Also, Nocera is an opinion columnist paid to give opinions. Lie of the Year may be reserved for an actual politician.