FORMER FED CHAIRMAN ALAN GREENSPAN - Expresses "Shocked Disbelief" at Breakdown of Credit Markets!
FORMERLY-REVERED GREENSPAN GRILLED BY CONGRESS!
How things have changed in the credit markets 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.
Read more and view accompanying video in Jim Puzzanghera's article in yesterday's Chicago Tribune.
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