It's galling that, after everything that's taken place, Greenspan is still treated like royalty; still given a platform so he can run-circles around his critics and make them look like fools. That's not what the public wanted, another playful sparring-match with Chairman Flim-flam. They wanted to see him grilled, interrogated, badgered, threatened and humiliated. And they want to see some trifling sign of remorse for the ruin he's brought on the country. But there was no remorse; no restless squirming, no flickering look of self-doubt, no sudden outburst of regret. Nothing at all. Just the brazen buck-passing of a self-admiring old man trying to pluck his reputation from the ashheap.
No one person is more responsible for the financial crisis than Alan Greenspan. He can say whatever he likes, but the 8.5 million people who spend their days shuffling in unemployment lines, have him to thank. And that's doubly true for the 300,000 families who lose their homes every month or the millions of people now scrimping by on food stamps. They can blame Maestro for the mess they're in.
In his testimony, Greenspan blamed subprime securitization, Fannie Mae and Freddie Mac, the fall of the Berlin Wall, too much saving in China etc. etc. etc. Everyone is to blame; everyone except Greenspan that is, the Teflon Fed chief.
Greenspan claims he never saw the housing bubble. It's a familiar refrain which goes something like this: "Bubble?" "What bubble?" "Who saw a bubble?" "Who said anything about a bubble?" "What could we do?" "How could we stop it?" "Who could have known?"
But then in the next breath, he admits he saw the bubble, but didn't think he could persuade congress to do anything about it. Go figure? Here's the quote:
GREENSPAN: "In that midst of period of expanding home ownership... Had we said we're running into a bubble and we'll have to start to retrench, Congress would say, we haven't a clue what you are talking about."
Interesting, isn't it? Greenspan has so many excuses, he let's the committee decide which ones sound believable. It's like an exam that's "multiple choice." And, notice how he shifts the blame onto congress now. Where's your pride, man?
The best exchange of the day was between Greenspan and Brooksley E. Born, the former commodities regulator who tried to stop Greenspan and Co. from deregulating derivatives, but ultimately failed. Born lost the battle and eventually her job. Here's an extended clip from the hearings which shows Greenspan's support for the lethal financial instruments which triggered the crisis.
Brooksley Born: "In your recent book you describe yourself as an outlier in your libertarian opposition to most regulation. Your ideology has essentially been that financial markets, like the OTC derivatives market, are self regulatory and that government regulation is either unnecessary or harmful. You've also stated that, as a result of the financial crisis, you have now found a flaw in that ideology.
You served as chairman of the Federal Reserve Board for more than 18 years, retiring in 2006, and became, during that period, the most respected sage on financial markets in the world. I wonder if your belief in deregulation had any impact on the level of regulation over the financial markets in the United States and in the world. You said that the mandates of the Federal Reserve were monetary policy, supervision and regulation of banks and bank holding companies, and systemic risk. You appropriately argued that the role of regulation is preventative.
But, the Fed utterly failed to prevent the financial crisis.
The Fed and the banking regulators failed to prevent the housing bubble. They failed to prevent the predatory lending scandal. They failed to prevent our biggest banks and bank holding companies from engaging in activities that would bring them to the verge of collapse, without massive taxpayer bailouts. They failed to recognize the systemic risk posed by an unregulated over-the-counter derivatives market and they permitted the financial system and the economy to reach the brink of disaster.
You also failed to prevent many of our banks from consolidating and growing into gigantic institutions that are now today too big and/or too interconnected to fail. Didn't the Federal Reserve system fail to meet its responsibilities failed to carry its mandate?"
Greenspan replied, "The notion that somehow my views on regulation were predominant and effective at influencing the Congress is something you may have perceived. But it didn't look that way from my point of view."
So, Greenspan expects us to believe that the reason he refused to regulate the OTC derivatives markets, was because no one would have paid attention to him? Is that it? That the congress would have regarded "The Greatest Central Banker of all Time" as some piddling, paper-shuffling bureaucrat who could be dismissed with a wave of the hand? What nonsense. What a shameful, cowardly man. Instead of regret or contrition, all he thinks about is covering his ass.