Grading PolitiFact: Did Obama warn about the subprime mortgage crisis?

I've written two different blog entries about the claims stemming from the Obama campaign about Obama's warnings about the subprime mortage crisis.

In the first one, part of my Legends of the Left series, I attacked the suggestion that Obama's written warnings about a subprime lending problem did not reasonably constitute any sort of prediction born of notable economic wisdom.

In the second one, I grant that it is fair to say that Obama warned about a subprime lending crisis, but I argue that it is not reasonable to see in the warning any concrete hint of the current scope of the problem. With all due respect to Andrew Sullivan, taking Obama's letter to Bernanke and Paulson as prescient is akin to thinking a Rhorschach inkblot represents a detailed diagram of the brain of a Beluga whale. Labeled.

Alexander Lane, writing for PolitiFact, disagrees.

"I wrote to (Treasury) Secretary (Henry) Paulson, I wrote to Federal Reserve Chairman (Ben) Bernanke, and told them this is something we have to deal with, and nobody did anything about it."

The last sentence appeared to refer to this letter that Obama sent to Paulson and Bernanke on March 22, 2007.

Obama's comments in the debate suggest the letter warned about the then-looming subprime lending crisis and its potential impact on the wider economy.

That's a fair summary; Lane's analysis on that point essentially agrees with mine. However, my post noted that the subprime problem was already extant. Lane's phrasing permits the reader to see the crisis as imminent rather than already present. A recent St. Petersburg Times story by fellow PolitiFact writers Robert Farley and Angie Drobnic Holan makes the point effectively:

Obama did send a letter to Treasury Secretary Henry Paulson and the new Federal Reserve chairman, Ben Bernanke, in March 2007, advising a meeting on the subprime mortgage mess. "We cannot sit on the sidelines while increasing numbers of American families face the risk of losing their homes," Obama wrote.

But economists agree that it was too late by that point, a point that economists Baker and Calomiris agree on. In separate interviews, they both used the same analogy: The horse was already out of the barn.

The horse was out of the barn, and in any case Obama's warning carried no readily discernable hint of the scope of the ensuing crisis. That is, unless you are one Alexander Lane:

So yes, Obama characterized the letter accurately. In it, he not only called for action to head off the unraveling of the subprime mortgage market, but also warned about its impact on the nation's economy. He sent the letter about 18 months ago, a time frame for which "two years" is a fair estimate. We find his claim to be True.

Lane simply offers no support for his claim regarding "impact on the nation's economy" remotely sufficient to connect the warning to the "potential impact on the wider economy," namely freezing credit markets and plunging market values. A letter warning of that type of consequence would have placed far greater emphasis on the dire nature of that outcome. It is reasonable to conclude that Obama was concerned about Americans with low incomes losing their homes and on the relatively modest harm to the economy that would result.

It was not reasonable to conclude based on the letter that Obama saw anything akin to the present economic conditions as a result of problems in the subprime lending market.

Alexander Lane, PolitiFact: F. You didn't do your homework and you flunked the final.