Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Greenspan's Hindsight is 20/20


Former Fed Chairman admits he had no idea what was going on.

This just in: Alan Greenspan isn't infallible, and the banking industry's hard-headed self-interest doesn't count for much when unleavened by a smidgeon of insight.

Greenspan, the former Federal Reserve Chairman, told a Congressional hearing that the credit crunch exceeded anything he had imagined; he goofed in thinking that banks would act intelligently to protect themselves from risky mortgages.

"I made a mistake in presuming that the self-interest of organizations, specifically banks and others, was such that they were best capable of protecting their own shareholders," Greenspan said.

Democratic Representative Henry Waxman of California and chairman of the House Oversight Committee, said that the Federal Reserve, the US Treasury and the Securities and Exchange Commission pushed "the prevailing attitude in Washington…that the market always knows best."

Please, people: We're facing a serious mess, and turning things around requires more than artful butt-covering in the final days before November 4th's presidential election.

The credit crunch is likely to undo Greenspan's reputation. He is no longer The Oracle who made fractured, sometimes nearly incomprehensible pronouncements while presiding over economic nirvana. Instead, he now looks like a lofty academic cloaked in theory - a theory whose intricate models have little or no relevance to the real world.

Waxman is no better: He sounds like just another yammering politician. No one ever said the market was always right - but it has a better chance of being right more often than a bunch of politicians who think that politics essentially defines everything.

The banking industry's blindness to its shareholders' best interests shouldn't be a surprise. There have been 10 or 12 banking panics in the last 170 years or so, and most have played out this way: Troubled banks that haven't been bailed out failed. If they fail, shareholders and sometimes depositors take it on the chin. This is news to Greenspan?
< Previous
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Featured Videos