Audit Notes: The Occupy-Rwanda Connection, Reckless Blame, Jarvis For Dummies

Speaking of Fort Smith’s City Wire, the website reports on a talk by former Alltel CEO Scott Ford to the local Chamber of Commerce. Ford formed a coffee company that does business in Rwanda. That might at least begin to attempt to explain why he compares the Occupy movement to the genocidaires in Rwanda:

Ford compared the “We are the 99%” Occupy protest slogan to the turmoil that existed surrounding Rwanda’s 1994 genocide. There, he pointed out, was where 90% of the poorest looked upon the 10%, “who were wealthy enough to own cows,” and said “that we the 90% being the bravest people we know are so poor, and the 10% are so rich, they must be cheating. How can they be making more money than us? They’re less than us,” Ford said.

Ford continued: “And from there it went to ‘you (the 10%) are subhuman.’ Then, the political leadership and the wife of the (Rwandan) President embraced it. They gathered their children together and held seminars for how to use a machete. From that point, it went from, ‘you are subhuman’ to ‘you are cockroaches and need to be killed.’”

“In 90 days, they killed a million people by hand,” Ford said.

Well, at least City Wire reports that Ford later clarified that he doesn’t see the Occupy protests turning into a Rwandan-style genocide.

But even then he’s out there:

Bringing the comparison home, he noted the Occupy movement is “so dangerous economically that you should be putting money in other countries.” He clarified he didn’t see the Occupy movement turning to the violent extremes found in Rwanda, but that “when you start this kind of class warfare, it ends not with people doing better, but worse.”

Ford is on the board of The King’s College, where the paranoia apparently runs deep. Dinesh D’Souza is its president.

— Jeff Madrick and Frank Partnoy give a harsh review in The New York Review of Books to Reckless Endangerment, the book by Gretchen Morgenson and Joshua Rosner that, bafflingly, blames Fannie and Freddie for the financial crisis.

The one claim that Morgenson and Rosner depend upon most for their extreme conclusions about Fannie and Freddie is especially poorly documented. Fannie, they write, started influencing the private sector in damaging ways beginning in the 1990s, when the GSEs reduced the down payments required for mortgages in order to help poorer Americans acquire housing loans. Fannie’s lower standards “set the tone for private-sector lenders across the nation.” In support, they cite two quotes from one unidentified former Fannie executive. They offer no empirical evidence, or even telling illustrations or anecdotes. A more recent paper by economist Edward Pinto offers more supposedly illustrative anecdotes about reduced down payments but remains unpersuasive. In fact, the loans guaranteed by Fannie in those years were always privately insured.

But the key point—which is largely missing from Reckless Endangerment —is that private lenders made far riskier loans than GSEs bought or guaranteed, especially during the 1990s, when subprimes issued to borrowers with low income and poor credit were relatively new. You will not read in Reckless Endangerment that the GSEs bought very few subprimes in these years. Rather than leading the way, Fannie’s market share of the low-income home buyers fell behind private industry’s far riskier lending to poorer home owners and others.


As noted, the GSEs bought very few subprimes in the 1990s. But it might especially surprise the inexpert reader to know that the GSEs did not own almost half of the “toxic mortgages” written by private companies, a remarkable exaggeration on the part of the authors. As usual, no source for the estimate is given, but it is likely based on the analysis of Pinto, who was a former Fannie official and is a colleague of Wallison’s at the American Enterprise Institute. To make the claim, Pinto radically redefined what qualified a mortgage to be subprime or an Alt-A, for which mortgage-holders were often not required to document their income, rejecting the conventional and widely accepted definitions. In his analysis, almost any mortgage held by Fannie and Freddie with modest above-average risk was categorized, to use Morgenson and Rosner’s term, as “toxic.”

If so, one would presume the delinquency rates suffered by the GSEs during the crisis would have been very high. But David Min, an analyst with the Center for American Progress, shows that the after-crisis delinquency rates on the large additional portion of GSE mortgages that Pinto claimed were high risk, and that was termed “toxic” by Morgenson and Rosner, was roughly 10 percent, far lower than the 25 to 30 percent default rate of true subprimes.4 In fact, the rate of delinquencies for all GSE securities in 2004 was 4.3 percent, compared to a delinquency rate in private industry of 15.1 percent of mortgages. In 2005, the GSE rate was 7.8 percent compared to 28.7 percent, and in 2006 and 2007, the rates reached 13.2 and 14.9 percent in the GSEs and 45.1 and 42.3 percent in the private market.5 None of these figures are cited in Reckless Endangerment. In fact, losses as a proportion of mortgages guaranteed or bought by the GSEs were far lower than in private industry.

— Gene Weingaten wrote a funny column the other day in the voice of Cantankerous Old Newspaperman, but it raises some good points about the kids on his lawn:

Every time I write despairingly about what’s happening to my profession, there erupts an online clatter from younger journalists who contend I am a dyspeptic old codger resisting necessary and healthful change. This happened most recently in June, after I had criticized “branding,” the new industry theology in which reporters are encouraged to brazenly promote themselves. I thought branding — a concept adopted from marketing — was not only unseemly but carries a whiff of desperation, a symptom of an industry in panic, willing to abandon core principles, trying anything and everything in the hope that something, somewhere, can turn a profit.

Anyway, that was four months ago. The big headline from the (Online News Association’s) convention in September was: BRANDING IS DEAD.

Yep. Branding is so passé, so summer 2011! Deader than a doornail. Deader than the sycamores on which some newspapers still quaintly inscribe themselves. Branding has been replaced by a new theology in which — this is complicated, but I think I have this right — you, the journalist, don’t actually exist. You are a composite of all the people who read you — with their desires channeled through you and satisfied by you and them together, working in tandem. You are them but not them, and they are you but not you, in a mystical nexus not unlike the Holy Trinity.

So, anyway, here is a picture of bacon taped to a cat.

I Can Haz Cheezburger’s Ben Huh, who comes in for some hits in Weingarten’s piece, fires back with what reads like Jeff Jarvis for Dummies:

What’s killing newspapers isn’t the lack of new ideas, it’s people who obstruct the change that’s required to survive.

What’s killing newspapers is the inevitable dispersion of advertising revenue and attention unleashed by the innernets. Period.

Yes, institutions tend to be change-resistant and that can be bad. But let’s not pretend that if only the newspapers would listen to the Web folks that they’d be in much better shape.

Has America ever needed a media watchdog more than now? Help us by joining CJR today.

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 Follow him on Twitter at @ryanchittum. Tags: , , , ,