Excellent critiques on the paper making the rounds that was (surprise, surprise) “funded in part by the financial services industry, including entities affected by the proposed settlement.”
Professor Adam Levitin, “The Rule of Law is Not Worth 20 Basis Points.”
Rortybomb Makes Five Points
Felix Salmon on Calomiris Ridiculous Take on the Mortgage Settlement
Yves Smith finds the paper “embarassingly bad.” She says,
First and foremost is that this article goes well beyond the normal boundaries of shilldom, which is generally confined to cherry picking of data and artful framing. There are multiple, gross distortions, which call into question either the writers’ honesty or their knowledge of the basics in the mortgage servicing arena. But that level of inaccuracy is necessary to create the simulacrum their patrons desire, that of a parallel universe in which servicers are virtuous, borrowers are scheming, and the rule of law operates only for the benefit of corporate interests.
Another one of its distinctive contributions is the multiple layering of what mere mortals would call “stupid”. For instance, this paper cites earlier work on strategic default and mortgage mods that is analytically dubious. So it creates a steaming edifice of garbage but via its extensive citations, it hews to the form of normal academic output, making it look legitimate to those who don’t know the terrain.