IS THIS HOW WE (finally) UNTANGLE PROPERTY RIGHTS IN AMERICA?

Last Friday I wrote that the debt crisis created by the GOP wasn't as big a deal as our on-going housing and mortgage mess. Specifically, I pointed out that because homeowners continue to be confronted with a legal maze of walls that makes a mess of property rights in America, that the integrity of our market system is threatened.

While the issue of property rights were discussed in the Financial Crisis Inquiry Commission's report (issued January 2011), key references to "deregulation," Wall Street's "shadow" banking system, and how Wall Street misled investors were ignored in a separate GOP minority report. And why not? The intent of the GOP minority report was clearly to place blame for the 2008 market collapse on the government (as I discussed here, here and here).

It turns out that there may have been a very specific reason for GOP commission members to blame the government (specifically Fannie Mae, Sallie Mae, and the CRA) for the 2008 market collapse. By blaming "the government" Wall Street and the banks get a free pass. This is where GOP commission member Peter J. Wallison enters the scene.

According to a report prepared for congress, Wallison may have deliberately tried to sabotage the FCIC report because he was working for, or getting support from, certain financial interests. Barry Ritholtz - CEO, blogger, and author of Bailout Nation - has posted correspondence that he received from a DC lawyer who is familiar with the developments, and suggests that Wallison's efforts may be backfiring.

One of the reasons for this - according to the report prepared for congress - is that Wallison's primary points were not supported by any of the commission members. From page four of the report we learn:

Internal Commission documents indicate that Commissioner Wallison used his position to promote a theory of the economic crisis supported by Chairman Issa and put forth by EdwardPinto, a Resident Fellow at the American Enterprise Institute (AEI). This theory, that government housing policy was the primary cause of the nation’s economic crisis, was ultimately rejected as flawed by every other member of the Commission [my emphasis].

Oddly enough, former Bakersfield congressman, Bill Thomas (also a GOP FCIC commission member), may be the point man for uncovering Wallison's activities. While Bill Thomas is a Washington insider, one of the thing's that pisses him off - and could tear him away from the GOP game plan for the moment - is if he thinks anyone is playing him for a fool.

If Wallison deliberately tried to pull one over on Bill Thomas (by feeding him false or misleading information), and then having Thomas push his agenda forward for his private gain, Wallison could be in trouble. Better yet, if Thomas can punish Wallison by discrediting his position we just might see some progress made when it comes to untangling our Wall Street-created property rights maze (which is critical for discrediting Wallison's position).

Stay tuned.

- Mark