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HOW THINGS HAVE CHANGED - Former Fed Chairman Alan Greenspan Now "The ENEMY"?

It really is a different world, folks!

Many things have really changed since Former Federal Reserve Board Chairman Alan Greenspan stepped down in January, 2006. 

Greenspan, once highly respected as an "oracle" for the economy, is now having his decisions as Fed Chairman second-guessed by Federal Legislators scrambling to resolve today's credit crisis.

Friday, during testimony to the House Oversight and Government Reform Committee, he expressed "shocked disbelief" at the breakdown of the credit markets.  This has triggered "a once-in-a-lifetime tsunami" inflicting great damage on the U.S. Economy, he continued.

Mr. Greenspan's appearance was his first before Congress since the current financial crisis began last month.

Last March, the former Fed Chairman expressed surprise that this crisis could even develop.  As he was questioned Friday, he admitted that the current crisis points up flaws in his low-intervention free-market strategy.

Said Greenspan, "Those of us who have looked to the self-interest of lending institutions to protect shareholder equity are in a state of shocked disbelief.  Such counter-party surveillance is a central pillar of our financial markets' state of balance.  If it fails, as it did this year, market stability is undermined."

California Democrat and Committee Chairman Henry Waxman, was direct in his criticism of Greenspan's policies.  "For too long, the prevailing attitude in Washington has been that the market always knows best," he said. "The Federal Reserve had the authority to stop the irresponsible lending practices that fueled the sub-prime mortgage market. But its longtime chairman, Alan Greenspan, rejected pleas that he intervene."

Continued Waxman, "The list of regulatory mistakes and misjudgments is long, and the cost to taxpayers and our economy is staggering."  He identified Greenspan as "perhaps the leading proponent of deregulation of our financial markets."

As we all know, current Federal Reserve Board Chairman Ben Bernanke, Treasury Secretary Henry Paulson, and others in the Bush Administration, have recently spearheaded a massive rescue program for the U.S. Financial System, and increased market intervention, regulation, and oversight - not favored during Greenspan's tenure

What say you?  Was Greenspan's attitude of "If It Ain't Broke" the main culprit in today's financial woes?

Please share!

See our post yesterday @ BlogChicagoHomes.com for more, as well as a link to story, with accompanying video, by Jim Puzzanghera's in Friday's Chicago Tribune.

DEAN & DEAN'S TEAM CHICAGO

Comment balloon 2 commentsDean Moss • October 26 2008 10:04AM

Comments

Dean,  Main culprit, not necessarily.  I think that there's enough blame to go around, including Greenspan.  As long as partisan politicians do the investigating, we'll never know the true story.  If ever there was a time for an "Independent Investigator," now is it.

Posted by Richard Iarossi, Crofton MD Real Estate, Annapolis MD Real Estate (Coldwell Banker Residential Brokerage) almost 10 years ago

While Congress was attacking Greenspan they should have been looking in the mirror.  All of these years they had access to information and his testimony and failed to act.  In addition, the Congressmen's paid staffs failed as well.  There's lot of people to blame, including all of us consumers who became addicted to nice possessions and low interest rates, whether we should have qualified or not.

Posted by Steve Hewson, Denver Metro Comnulll Real Estate (KW Commercial Real Estate, LLC - Denver) almost 10 years ago

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