Friday, September 14, 2007

On a vindication kick - this time, Greenspan

Washington Post, Sept. 13, 2007 - "Greenspan says didn't see subprime storm brewing":

"While I was aware a lot of these practices were going on, I had no notion of how significant they had become until very late," Greenspan said. "I really didn't get it until very late in 2005 and 2006."

An old post of mine:

Friday, June 17, 2005

Alan Greenspan should work at a coffeehouse

Greenspan, June 2005:

"The apparent froth in housing markets may have spilled over into mortgage markets," Alan Greenspan, the Federal Reserve chairman, said while testifying to Congress last week. "The dramatic increase in the prevalence of interest-only loans, as well as the introduction of other relatively exotic forms of adjustable-rate mortgages, are developments of particular concern."

Greenspan, February 2004 (via Brad DeLong):

"American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage. To the degree that households are driven by fears of payment shocks but are willing to manage their own interest rate risks, the traditional fixed-rate mortgage may be an expensive method of financing a home."

Ask not from whom the froth bubbles, it bubbles from thee.

A lot of us saw the problem earlier than June 2005, buddy. Your genius certificate needed to be revoked a long time ago. Regardless, even in June 2005 the Fed could've taken steps to stop another 6-12 months of people being sold horrible mortgage packages, and we'd be better off now, but Greenspan's Ayn Rand philosophy told him to do nothing. Thanks.

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