Alan Greenspan: Lying Old Man
The New York Times article “Fed Shrugged As Subprime Crisis Spread contains an audacious bit from Alan Greenspan:
An examination of regulatory decisions shows that the Federal Reserve and other agencies waited until it was too late before trying to tame the industry’s excesses. Both the Fed and the Bush administration placed a higher priority on promoting “financial innovation” and what President Bush has called the “ownership society.”
On top of that, many Fed officials counted on the housing boom to prop up the economy after the stock market collapsed in 2000.
Mr. Greenspan, in an interview, vigorously defended his actions, saying the Fed was poorly equipped to investigate deceptive lending and that it was not to blame for the housing bubble and bust.
Alan Greenspan thinks you’re stupid.
WASHINGTON — Federal Reserve Chairman Alan Greenspan said Monday that Americans’ preference for long-term, fixed-rate mortgages means many are paying more than necessary for their homes and suggested consumers would benefit if lenders offered more alternatives.
In a standing-room-only speech to the Credit Union National Association meeting here, Greenspan also said U.S. household finances appeared generally sound, despite rising debt levels and bankruptcy filings. Low interest rates and surging home prices have given consumers flexibility to manage debt, he said.
[snip]
He said a Fed study suggested many homeowners could have saved tens of thousands of dollars in the last decade if they had ARMs. Those savings would not have been realized, however, had interest rates shot up.“American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage,” Greenspan said.
Of course, maybe I’m being to harsh on Alan. Maybe he’s not lying about his advice to prospective homeowners. He’s 81 years old, and probably growing senile.
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