Financial Crisis

Greenspan Defends Record

Alan Greenspan once was considered the brightest financial whiz alive; now, he says that he was only doing C-minus work. “I was right 70 percent of the time,” Greenspan told the Financial Crisis Inquiry Commission on Wednesday, “but I was wrong 30 percent of the time.” In defending the Federal Reserve, Greenspan noted that the Fed lacks the enforcement powers that other regulators have and said that the Fed’s low interest rates were not to blame: "The house price bubble, the most prominent global bubble in generations, was caused by lower interest rates but...it was long-term mortgage rates that galvanized prices, not the overnight rates of central banks, as has become the seeming conventional wisdom.” He also emphasized that poor people are not to blame, as some have argued: “[I]n my judgment, the origination of subprime mortgages—as opposed to the rise in global demand for securitized subprime mortgage interests—was not a significant cause of the financial crisis.”