Jesse Eisinger has a good New York Times column skewering Edward Pinto, the American Enterprise Institute economist behind much of the misinformation cited as evidence by those who fallaciously argue that government caused the housing crisis, not Wall Street and the private mortgage lenders.

Now Pinto is arguing that the Federal Housing Administration is a ticking time bomb.

Late last year, the F.H.A. issued its annual report to Congress. According to estimates, over its lifetime the agency will have to pay more out on the mortgages it has insured than it has taken in. The report estimated the potential shortfall at $16 billion, which is a lot in absolute terms, but minuscule in relation to the federal budget and the $1.1 trillion F.H.A. portfolio.

Despite these modest numbers (more on that below), the same crew that assailed the government’s role in the housing bubble is now rending its garments about the F.H.A. Critics, like Edward J. Pinto of the American Enterprise Institute, argue that the agency has not only failed to help low-income communities, but is actually destroying them with reckless loans.

Nonsense, says Eisinger, persuasively, and he points out that without the FHA taking up the slack, the housing bust and recession would have been much, much worse:

Without the agency’s lending, mortgage rates would have doubled and home prices would have dropped another 25 percent, estimates Mark Zandi, chief economist of Moody’s Analytics.

— Speaking of the Big Lie of the crisis, this one’s from before Christmas, but well worth flagging. Matt Taibbi gets a hold of Columbia B-school dean, former Bush administration official, and Romney adviser Glenn Hubbard’s deposition in MBIA’s lawsuit against Countrywide.

Taibbi recalls the infamous scene in the documentary Inside Job where Charles Ferguson asks Hubbard if he consulted for Wall Street:

“This isn’t a deposition, sir,” he hissed. “I was polite enough to give you time, foolishly I now see. Give it your best shot.”

Again, there’s just nothing like karma. If your answer to a perfectly sensible question is going to be, “Screw you, this isn’t a deposition,” exactly how long do you think it’ll be before you end up actually getting deposed? And forced to answer, under oath, just how much your opinions cost?

A couple of years, as it turns out.

Countrywide paid Hubbard $1,200 an hour for his analysis and testimony that it didn’t commit widespread fraud in its mortgage underwriting, instead blaming the poor performance of the company’s loans on the economy and Fannie and Freddie. But MBIA forced him to admit under oath that he didn’t look at Countrywide’s underwriting.


Hubbard must be a very inquisitive thinker. He took $1200 an hour specifically to not learn how subprime loans were created. Moreover, he did this non-learning for Countrywide years after the financial collapse, long after the truth about that company had already become common knowledge pretty much everywhere in the world outside Hubbard’s office, long after Countrywide CEO Angelo Mozilo had been charged by the SEC with deliberately misleading investors (and insider trading, to boot), and long after the Attorney General of California had concluded that Countrywide was essentially a giant scheme to use mass fraud to dump pools of bad loans on unsuspecting marks on the secondary market.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at