Mr Greenspan finds a flaw

Alan Greenspan is funny too.

[A] humbled Mr. Greenspan admitted that he had put too much faith in the self-correcting power of free markets and had failed to anticipate the self-destructive power of wanton mortgage lending. “Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief,” he told the House Committee on Oversight and Government Reform.

A state of shocked disbelief…that people who ran lending institutions were more excited about their own bonuses and profits than they were attentive to shareholders’ equity. Is it just me or does that seem ever so slightly naïve?

Not quite just me; Henry Waxman had a similar thought.

“You had the authority to prevent irresponsible lending practices that led to the subprime mortgage crisis. You were advised to do so by many others,” said Representative Henry A. Waxman of California, chairman of the committee. “Do you feel that your ideology pushed you to make decisions that you wish you had not made?” Mr. Greenspan conceded: “Yes, I’ve found a flaw.”

Ah, have you! Well spotted!

Mr. Waxman noted that the Fed chairman had been one of the nation’s leading voices for deregulation, displaying past statements in which Mr. Greenspan had argued that government regulators were no better than markets at imposing discipline. “Were you wrong?” Mr. Waxman asked. “Partially,” the former Fed chairman reluctantly answered, before trying to parse his concession as thinly as possible.

How would things be looking now if you’d been entirely wrong?

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