That Housing Bubble

I rarely read George Will’s columns, and I stopped completely when he wrote one that blatantly lied about the findings of a university research center in an effort to debunk global climate change. (The center involved issued a statement protesting the mis-characterization of its research, but if the Washington Post ran it, I didn’t see it.)

Evidently, Will used a recent column to resurrect a horse that should have been dead long ago. When the housing bubble first burst, conservative pundits immediately blamed the whole mess on the CRA–the Community Reinvestment Act. The big bad government had forced lenders to make bad loans out of a misplaced “compassion” for non-creditworthy slackers. I knew this was bullshit, because I’d spent several years as a real-estate lawyer, and was well-acquainted with the Act and the practices of the banks that were covered by it.

Dean Baker has responded to Will’s effort to resurrect that argument with an excellent (and–gasp!–factual) smack down. It’s worth quoting at some length:

“There is not much ambiguity in the story of the housing bubble. The private financial sector went nuts. They made a fortune issuing bad and often fraudulent loans which they could quickly resell in the secondary market. The big actors in the junk market were the private issuers like Goldman Sachs, Citigroup, and Lehman Brothers. However, George Will and Co. are determined to blame this disaster on government “compassion” for low-income families.

The facts that Will musters to make this case are so obviously off-base that this sort of column would not appear in a serious newspaper. But, Will writes for the Washington Post.

The first culprit is the Community Re-investment Act (CRA). Supposedly the government forced banks to make loans against their will to low-income families who did not qualify for their mortgages. This one is wrong at every step. First, the biggest actors in the subprime market were mortgage banks like Ameriquest and Countrywide. For the most part these companies raised their money on Wall Street, they did not take checking and savings deposits. This means that they were not covered by the CRA.

Let’s try that again so that even George Will might understand it. Most of the worst actors in the subprime market were not covered by the CRA. The CRA had as much to do with them as it does with Google or Boeing. …”

Nuff said.

There’s Law and There’s Politics

A lawyer friend of mine recently sent me an email commenting on the Recount Commission’s ruling on Charlie White’s residency.

“Contrary to what I repeatedly heard from the Commission members yesterday, mostly Wheeler, Indiana law does not state that residence is totally a function of one’s intent.  While important, the Supreme Court in the Evan Bayh case said these things about the role of intent in domicile cases.  First, it said that “a self-serving statement of intent is not sufficient to find that a new residence has been established.” (“I intended to live at Broad Leaf at the home of the woman I divorced 3 years earlier, while I was engaged to another woman, and after I’d leased and then purchased a condominium with a 30-year mortgage and paid all the utility bills while my fiancé was living there.”) Second, the Bayh case held that residency requires both intent and “evidence of acts taken in furtherance of the requisite intent, which makes the intent manifest and believable.”  In other words, one’s professed intent, to be made believable, requires conduct that is consistent with that professed intent.  And third, the Court in the Bayh case emphasized that a location cannot be one’s domicile unless it is one’s “true, fixed, permanent home,” not a place (like one’s ex-wife’s home) where one goes occasionally to “crash”, i.e. a purely temporary arrangement.”

The Commission essentially ruled that all White needed to do was profess an intent to reside at his ex-wife’s home.  But as my friend pointed out, his ex-wife explicitly testified that the arrangement was “never intended to be permanent but only temporary.” Furthermore, White’s contemporaneous conduct and the circumstances surrounding his divorce and engagement to another woman was–in any world most of us inhabit or recognize–totally inconsistent with his testimony that he intended to take up permanent residence with his ex.  He leased and then purchased the new condo and moved his fiancé into it at no charge to her; he represented to his lending institution, to his future employer, to his prior employer and to the IRS that this condo would be his permanent residence. If this were a made-for-TV movie, the obvious question would be: “Were you lying then or are you lying now, Mr. White?”

As my friend conceded, the process is and was intended to be political rather than judicial in nature, so that a political rather than a judicial outcome would result.  And that is precisely what happened here. If White thinks he will have as easy a time of it when the criminal charges against him are heard, he’s likely to be very disappointed.

The great irony is that, by refusing Republican and Democratic demands that he resign, White is continuing to embarrass the same Republican party that provided him with last week’s Pyrrhic victory.

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Facts, Law and Mike Delph

A friend who uses Twitter sent me a series of Tweets from Mike Delph today. Most railed against “activist” judges (beginning with Chief Justice Marshall’s decision in Marbury v. Madison) and the “elites that control them.” Others were–frankly–incomprehensible, not to mention ungrammatical. The one sentiment that came through loud and clear is that Delph is highly pissed off that the courts would dare strike down provisions of his pet legislation. (Putting this as politely as possible, if he has even a rudimentary grasp of the constitutional architecture, that grasp was not on display in these tweets.)

I thought about Delph’s war on immigrants when I read a recent article from the Atlantic.

The article was titled “Safety in Diversity: Why Crime is Down in America’s Cities.” A couple of relevant paragraphs will give its basic thrust, but the entire article is worth reading.

In the popular imagination, crime is frequently associated with big, densely populated cities. Here again, we can separate fact from myth.  Primary cities and older high-density suburbs exhibited the largest decreases in crime between 1990 and 2008, according to the Brookings study. And the gap between city and suburban violent crime narrowed in two-thirds of the nation’s 100 largest metro areas. Our own analysis turns up no association whatsoever between metro size or metro density and the overall level of crime, though we do find a modest correlation (.25) between density and violent crime.

……

It might be hard to wrap your mind around this–especially with all the demagoguery about immigration. But the numbers tell a different story than our alarmist pundits and politicians do. “Since 1990, all types of communities within the country’s largest metro areas have become more diverse,” Elizabeth Kneebone, one of the authors of the Brookings report, wrote in The New Republic. “Crime fell fastest in big cities and high-density suburbs that were poorer, more minority, and had higher crime rates to begin with. At the same time, all kinds of suburbs saw their share of poor, minority, and foreign-born residents increase. As suburbia diversified, crime rates fell.” Along with their entrepreneurial energy and their zeal to succeed, immigrants are good neighbors–cultural and economic factors that militate against criminal behavior, and not just in their own enclaves but in surrounding communities as well.

Don’t you just hate it when the facts smack you down?

Thoughts for the Holiday Weekend

This is the 4th of July holiday weekend, and most of us are planning cookouts, fireworks celebrations and the like. In my house, we’ve been getting ready for a long-planned European trip–giving instructions to the graduate student who has graciously agreed to “house sit,” making sure our packing list is complete, etc.

But it is also an appropriate time to think about the state of our country and its government. So as this celebratory weekend gets off to a start, allow me to share some random concerns.

  • One of America’s great assets has been the fact that, as a nation, we’ve never been particularly ideological.  We’ve been one of the newest and most pragmatic of countries, and as a result we’ve escaped some of the worst results of hereditary privilege, class resentment, and zealotry. That seems to be changing.
  • Checks and balances were meant to ensure that no branch of government got too powerful; is it possible that we have gone too far toward “checking” and lost our “balance”? The founders didn’t have political parties, and I doubt they envisioned a time when a political party in the legislative branch would close ranks and simply refuse to co-operate or negotiate with the administration. Whether this is due to ideology or politics hardly matters–it makes governing virtually impossible. (The Democrats would undoubtedly love to do the same thing if the situations were reversed, but they lack the ideological consistency and organizational discipline to pull it off.) Structures matter more than current punditry might suggest, and when lawmaking is structured to require a measure of participation and compromise from all sides, the absence of that co-operation is a very serious problem.
  • This country has given so much to its citizens, yet some of those who have benefited the most seem least willing to acknowledge that debt, and least willing to pull their own weight. The other day, a wealthy man of my acquaintance told me that he’d made his money without help from anyone, and didn’t see why he should pay taxes to support people who hadn’t worked as hard and been as successful. No one gave me anything, he said. Of course, his parents were able to raise him in a stable society, and could send him and his siblings to good public schools. Public agencies made sure his food was safe to eat. When he graduated from his (public) university and started his business, he didn’t have to pay off the local authorities. He had access to public roads that allowed him to receive raw materials and ship his goods.  Municipal police and firefighters ensured the safety of his home and business. Impartial courts decided his disputes with customers or suppliers. The existence of a stable, regulated economy meant he could borrow necessary capital. And on and on…..These are assets that people in many other countries lack. Good governments create the conditions that make free enterprise possible. It constantly amazes me that so many people fail or refuse to understand that.
  • Our governments–state and federal–are far from perfect, and some of our policies are positively insane. (We may or may not agree on which ones those are.) But dammit, patriotism isn’t wearing a flag pin on your lapel. Patriotism is civic involvement in the nitty-gritty of politics and governance–voting, attending public meetings, writing letters to elected officials. And paying taxes–so that America can continue to provide a social and physical infrastructure that allows people to succeed.

Happy Fourth of July.

Appearances of Impropriety

Yesterday, following the announcement of the Recount Commission’s finding that Charlie White had been eligible to run for Secretary of State (or, more accurately, their conclusion that they couldn’t conclusively prove otherwise), I got a call from a reporter. Her question was not about the Commission’s conclusion; instead, she wanted to know whether the chair should have recused himself from the deliberations, since he had hosted a fundraiser for White, and his firm had donated $5000 to White’s campaign.

My answer, of course, was yes.

It is perfectly possible that–as he claimed–the contribution and prior support did not influence the chairman’s decision. But that is irrelevant. The facts of the matter raised an appearance of impropriety, and that appearance alone was enough to require recusal. Citizens have to be able to trust that their public institutions are operating impartially and fairly; otherwise, suspicion and cynicism will undermine our faith in the legitimacy of government and erode respect for–and compliance with–the laws.

Instances of what we might call “ethical insensitivity” seem to be proliferating: recently, commentators have reported on activities of Clarence Thomas (and especially his wife) that raise serious questions about the Judge’s impartiality. A couple of years ago, Justice Scalia shrugged off criticism of his cozy vacation with Dick Cheney during a time when a lawsuit against Cheney was pending at the Supreme Court.  Closer to home, we have the President of the City-County Council insisting that his vote to award a lucrative city contract to a client of his law firm did not constitute a conflict of interest.

In each of these cases–and many others–the person accused of a conflict insisted that the relationship at issue didn’t affect his judgment. Perhaps it did, perhaps it didn’t. But that isn’t the point. The point is that such relationships inevitably cast doubt on the integrity of the proceeding.

Think about it: If you were a party in a lawsuit, and you knew that the opposing party regularly played poker with the judge, and had supported him politically, how confident would you be that the Judge’s ultimate ruling would be impartial?   Wouldn’t you ask for a change of venue, or a different judge? If you were a taxpayer whose elected representative was voting to spend your tax dollars on a deal that benefited his brother-in-law, or a big client, how confident would you be that he cast that vote based solely on policy considerations?

And how reassured would you be if such public servants pooh-poohed your reservations?

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