Matt Yglesias disputes Felix Salmon's idea that major newspaper op-eds ought to be judged on their merits, not on who wrote them. Their discussion was sparked by an op-ed from Mohamed El-Erian, the head of PIMCO, the top money-management fund in the world. Yglesias thinks that El-Erian's position has something to do with the article's publication and that potential conflicts of interest ought to be considered when assessing his public-policy ideas.
Luckily, we have something of a natural experiment to test the marketplace of ideas: PIMCO co-founder Bill Gross last week revealed his plan to have the government refinance the mortgages held by Fannie Mae and Freddie Mac; it's a direct way to create stimulus by reducing people's monthly mortgage payments. The idea got written up by Reuters and the Huffington Post, and Ezra Klein lauded the plan.
The Obama administration is already familiar with this idea; they call it "HARP" -- the Home Affordable Refinance Program -- and it allows people with underwater mortgages with a Loan-To-Value ration of 125 percent to refinance through Fannie and Feddie at today's low rates. (Typically, someone with an underwater mortgage would be unable to refinance a home loan.) At least 350,000 Americans have refinanced through the program. So far as I can tell, the only difference between HARP and Bill Gross' plan is that Gross would relax the program's standards further so that more people could participate, and perhaps act to streamline the re-fi process further, although it's clear that Gross hasn't thought much about how to actually implement the idea. (Not everyone thinks this it is the best idea, incidentally.)
The HARP program has been around for nearly 18 months, and received very little attention, especially compared to the much-maligned Home Affordable Modification Program (HAMP). But "legendary investor" Bill Gross mentions it at a housing finance conference, and the idea gets a lot of currency -- and few of the people talking about the idea seem to know about HARP; it's not clear whether Gross himself does.
Interestingly, Gross maintains the idea would lead his firm to take a loss on their mortgage portfolio, which complicates the argument about ideas and conflicts of interest (although I'm curious to know how much gain he would see from increased home prices that would result from broadening HARP). Still, it's safe to say that managing billions of dollars in assets certainly gets attention in the public debate, certainly more so than the officials who came upon this refinancing idea and implemented it last year.
-- Tim Fernholz
