I don’t have the expertise to add anything to the discussion, but if you want to see the definition of a demolition job on a shitty paper, this is it. Yesterday American Banker posted a research paper by three economists, Charles Calomiris, Eric Higgins, and Joe Mason, into the possible effects of a settlement between 50 state attorneys general and mortgage servicers. According to the first footnote, the paper was funded “in part by the financial services industry, including entities affected by the proposed settlement.” This is a standard practice in the field of economics and something that has been highly criticized by Yves Smith in her book Econned and in Charles Ferguson’s Academy Award winning documentary, Inside Job.
Not shockingly, a paper funded by the mortgage service industry is laughably bad, ranging from being deliberately obtuse to factually inaccurate to intellectually inconsistent to intellectually lazy. The financial blogosphere has rapidly torn the paper apart. Here are a few articles worth reading on it:
- Felix Salmon, Calomiris’s ridiculous take on the mortgage settlement
- Mike Konczal, Five Points on that New Anti-Foreclosure Fraud Settlement Paper by Calomiris, Higgins and Mason
- Yves Smith, Initial Award of Frederic Mishkin Iceland Prize for Intellectual Integrity: Calomiris, Higgins, and Mason Paper on Mortgage Settlement
- Adam Levitin, The Value of Rule of Law: 20 Basis Points
All of these are detailed take-downs of a bunk paper. If you’re at all interested in how the mortgage servicers are marshalling a defense of their practices from both state attorneys general and federal oversight bodies, it’s instructive to read these posts. Additionally, you can bet that lobbyists for mortgage servicers are taking the Calomiris, Higgins, and Mason paper around the Hill and trying to influence policy makers away from actually doing anything about the foreclosure crisis. Getting this debunked is important and folks did their part in an heroic way.