CRA and Ritholtz
Since I just had a post on Bailout Nation, the book Barry Ritholtz co-wrote with Aaron Task, I figured, why not have another post about Ritholtz. See, something I read on his blog has been botheirng me for a few weeks now.
Ritholtz has done a great job pointing out over and over that the Community Reinvestment Act (CRA) had just about nothing to do with the economic meltdown. Finally, he got pissed and issued a challenge:
Well, its time to put up or shut up: I hereby challenge any of those who believe the CRA is at prime fault in the housing boom and collapse, and economic morass we are in to a debate. The question for debate: “Is the CRA significantly to blame for the credit crisis?”
A mutually agreed upon time and place, outcome determined by a fair jury, for any dollar amount between $10,000 up to $100,000 dollars (i.e., for more than just bragging rights).
I don’t think that was a good idea. Here’s my reasoning…
1. There’s no such thing as a fair jury. And even if there was, being fair doesn’t mean the jury can’t be bamboozled. Presentation matters a lot. If that wasn’t the case, there’d be no need for attorneys. Most people would present their own case and save the expense of having an attorney.
2. That means a jury could get it wrong.
3. While Ritholtz’ challenge may have a commendable outcome in this instance, it has a deleterious effect in the long run, putting the debate out of reach of most people who cannot afford to take the risk of losing the same amount of money that Ritholtz can. And what if Steve Forbes puts up a similar challenge for a few tens of millions? Even if Forbes’ position is buffoonish – and in my opinion, if Forbes has a position on whatever subject, it probably is buffoonish – very, very few people could afford to have that debate on the offchance that the jury got the wrong conclusion. Probably even Ritholz would be priced out. The end result is that realistically, only folks like Bill Gates would be entitled to an opinion.
I’m all for holding people responsible for the consequences of their inanity, including whatever silly notions they propagate, but I think Ritholtz has the wrong target here. As bad as the clowns who just won’t get the facts right after the fact are, they pale in comparison to the schmucks who perpetrated the fraud. Its the fraudsters who should be held liable for all this mess.
To close in Barry Ritholz fashion, what say ye?