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The best seller Reckless Endangerment implicates The New York Times in another plagiarism scandal, in which a star reporter appears to be shilling for The American Enterprise Institute.

For the past five months, Peter Wallison of The American Enterprise Institute has been touting Reckless Endangerment, claiming that the book "vindicates" his solitary dissent to the final report of the FCIC. In fact, the opposite is true. The book authors, Gretchen Morgenson and Joshua Rosner, plagiarized text and analyses from The American Enterprise Institute and passed it off as their own reporting.  By concealing their sources, they were able to sidestep the obvious problem with the book. The FCIC report demolished its core thesis--that Fannie and Freddie were primary drivers of the financial crisis--just as it demolished the claims made in Wallison’s dissent. Wallison compounds the deception by claiming that the book offers something new.

Reckless Endangerment is a best seller for one reason and one reason only, because of the false insinuation that the book adhered to the reporting standards of The New York Times, where Morgenson works. Neither The Times nor the authors nor have come clean about the journalistic malfeasance.  And Wallison keeps plugging the book in The Wall Street Journal, in Barron’s, at Bloomberg, and on the AEI website.

The New York Review of Books was the first major publication to question the veracity of the claims made by Morgenson and Rosner. In their article, Jeff Madrick and Frank Partnoy suggest that the book’s authors used the same source material as Wallison, though they offer no hard proof. They quote this key passage from the book, which is notable because of its falsity:

To meet the goals Fannie and Freddie had to buy riskier mortgages, such as those defined as subprime….

Many of those loans wound up in Fannie’s and Freddie’s portfolios. By 2008, some $1.6 trillion of toxic mortgages, or almost half of those that were written, were purchased or guaranteed by Fannie and Freddie.
Madrick and Partnoy write:
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.”
But "toxic" wasn’t Morgenson and Rosner’s term; it was Charles Calomiris’ term. Calomiris, a colleague of Wallison’s and Pinto’s at the American Enterprise Institute, wrote the key passage, which was lifted, almost verbatim, by Morgenson and Rosner, from a paper, by Calomiris, which echoed the same right wing mantra:
For Fannie and Freddie to maintain lucrative implicit (now explicit) government guarantees on their debts, they had to commit growing resources to risky subprime loans (Calomiris and Wallison 2008). Fannie and Freddie ended up holding $1.6 trillion in exposures to those toxic mortgages, half the total of non-FHA outstanding amounts of toxic mortgages (Pinto 2008).
Again, compare that with the only section in Reckless Endangerment that offers data in suport of its thesis:
By 2008, some $1.6 trillion of toxic mortgages, or almost half of those that were written, were purchased or guaranteed by Fannie and Freddie.
It’s the sort of thing that would embarrass Jayson Blair. Jack Shafer at Reuters zeroed in on the problem last October, when he wrote a piece advocating zero tolerance for plagiarism:
The plagiarist defrauds readers by leading them to believe that he has come by the facts of his story first-hand–that he vouches for the accuracy of the facts and interpretations under his byline. But this is not the case. Generally, the plagiarist doesn’t know whether the copy he’s lifted has gotten the story right because he hasn’t really investigated the topic. (If he had, he could write the story himself.) In such cases he must attribute the material he borrows so that at the very least the reader can hold somebody accountable for the facts in a story.

Or to put it another way, a journalist who does original work essentially claims, this is true, according to me. The conscientious journalist who cites the work of others essentially makes the claim that this is true, according to somebody else. The plagiarist makes no such claims in his work. By having no sources of his own and failing to point to the source he stole from, he breaks the “chain of evidence” that allows readers to contest or verify facts. By doing so, he produces worthless copy that wastes the time of his readers. And that’s the crime.

Morgenson, Rosner, Wallison and Calomiris are all promoting the same deception. By claiming that $1.6 trillion in loans were "toxic," they leave readers with the false impression that they are talking about loan performance, about the loans' rate of delinquency and repayment after closing. In fact, they were embellishing the deceptive labeling scheme devised by Edward Pinto, who never examines actual loan performance. Pinto's sleight of hand, used by these authors and other right wing propagandists, relies on his refusal to compare the GSEs' actual loan performance with that of the rest of the mortgage market, as the FCIC did, because the real data shows that, relatively speaking, the GSEs' loan performance has been exemplary.

The coup de grace was Morgenson’s claim that, “We have identified as many of our sources as we could when we could." They sure didn't identify Wallison, who was singled out by Barry Ritholtz as one of the most notorious proponents of The Big Lie concerning the causes of the financial crisis.

If for some reason you suspect that this instance of plagiarism is a fluke, that Morgenson and Rosner did not intend to pass off AEI propaganda as their own reporting, check out the other uncanny parallelshere.

Is anyone going to insist that Morgenson and Rosner disclose their sources?

Originally posted to Skeptic All on Wed Mar 28, 2012 at 01:19 PM PDT.

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