Alan Greenspan confesses—sorta! “We are in the midst of a once-in-a century credit tsunami,” Greenspan told the House Committee of Government Oversight and Reform today. “In 2005, I raised concerns that the protracted period of underpricing of risk, if history was any guide, would have dire consequences. … The evidence strongly suggests that without the excess demand from securitizers, subprime mortgage originations (undeniably the original source of crisis) would have been far smaller and defaults accordingly far fewer.” Folded in there is a mild mea culpa: “[T]hose of us who have looked to the self-interest of lending institutions to protect shareholder’s equity (myself especially) are in a state of shocked disbelief.” Perhaps, though, Greenspan hasn’t quite lost that old magic: As of this writing, the Dow has risen 200 points.
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