Dr. Stan Liebowitz makes some good points in his article, including that we need to get back to the basics and impose an equity requirement on residential mortgages. Unfortunately, he also omitted some useful data that clearly discloses his bias and gives credence to the old saw that: “There are three kinds of lies: lies, damn lies, and statistics.”
I do not agree with Dr. Liebowitz's conclusion that the increase in subprime defaults is statistically insignificant such that we can summarily dismiss allegations of inappropriate conduct as being purely partisan politics.
A quick survey of the internet confirms the following: subprime mortgages account for 25% of residential mortgages and the default rates in 2005 were 2.2% for prime and 14.6% for subprime borrowers. And while I am not an economist (like Dr. Liebowitz) or a mathematician, it seems to me that 200% of 25% of 14.6% is a statistically bigger number then 488% of 75% of 2.2%. In fact, the increased subprime default rate is almost 300% larger than the increased prime default rate!!! Clearly Dr. Liebowitz should have been able to figure this out for himself. So I can only conclude that he has an undisclosed agenda.
Regardless, I would highly recommend that Dr. Liebowitz revisit his conclusions (and perhaps a remedial statistics class) and suggest some strategies to prevent Democrats like Rep. Barney Frank and Senator Chris Dodd from further hurtful meddling.
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