Send a Tweet
Most Popular Choices
Share on Facebook 14 Share on Twitter Printer Friendly Page More Sharing
OpEdNews Op Eds   

At least "someone" is admitting they were wrong

By       (Page 1 of 2 pages)   No comments
Message Dave Lefcourt
Become a Fan
  (21 fans)

Well at least "someone" is admitting they were wrong[1] (with regard to their complicity relating to the financial meltdown of 2008).

That "someone" is Alan Greenspan, the former chairman of the Federal Reserve (until2006) who testified last week before the "Financial Crisis Inquiry Commission" headed by Phil Angelides whose task is the examination of "the origins of the financial crisis".[2]

But the "something" wrong Greenspan alluded to went just so far i.e., "I was wrong only 30% of the time" I was right 70% of the time",[3] (I guess you have to take what you can get).

The hearing for this day focused on the oversight of the sub-prime mortgage market and the Feds role in overseeing the mortgages that were at the heart of the collapse, along with the securitization of these mortgages (the bundling of mortgages into securities) that were sold to big investors (Fannie Mae, Freddie Mac, pension funds, utilities, municipalities, countries et al) and then backed (insured)by derivatives (credit default swaps underwritten by the likes of AIG, the largest recipient of bailout dollars).

So here was Greenspan (while admitting some culpability) still defending his role as Chairman as he "blamed affordable housing mandates set by federal officials on" Fannie Mae and Freddie Mac" their large scale purchase of securities backed by sub-prime mortgages, for the housing bubble that later burst sending financial markets reeling."[4]

Well by now, Angelides was having none of it, stating, "The Fed failed to write tough rules for these mortgages under your tenure. You did have the ability to regulate the products coming into the marketplace. I do want to make sure we're not rewriting history here" you could have, you should have and you didn't."[5]

Let's face it, not too many of us today were around in 1933 when Ferdinand Pecora and the commission he chaired held hearings on the causes of the financial crisis that precipitated the "Great Depression." Reading some of the highlights of his hearings, Pecora didn't mince words and took on the financial titans of that time with no holds barred scrutiny and determination to hold those responsible to account. Out of his commissions findings resulted in the regulation and separation of the commercial banks and the financial investment institutions with the enactment of the Glass, Steagel Act that kept the "masters of the universe" (financial wheeler dealers) essentially in check from precipitating and creating another depression.

That is until the 1980's and Reagan, the vilification of government, the era of deregulation culminating with the Graham, Leach Bliley Act of 1999, that essentially overturned Glass Steagel.

We have yet to hear from Lawrence Summers and Tim Geitner (the former Obama's chief economic advisor and the latter his Treasury Secretary) at the Angelides proceedings as to their roles in the financial crisis and as prime advocates for deregulation. Summers was Clinton's Treasury Secretary who pushed the president to sign "Graham" while Geitner was a major player in the bailouts of the banks that were the recipients of the peoples money in his role as Chairman of the New York Fed and now in his present role as Treasury Secretary.

Though a depression may have been averted (with the present "great recession" still in effect) to date there has been no real reregulation enacted of the financial behemoths. Derivatives are still completely unregulated, these credit default swaps still offered with no transparency as to their transactions. To wit, what controls are in place to prevent the next financial crisis?

It may be a "slim reed" to hold onto, but Angelides commission and his obvious no nonsense approach is a breath of fresh air (compared to the stench and aroma that keeps wafting from the "banksters" maneuvering and still wanton ways). Will his commission's findings have "teeth" and how binding will they be? Will Congress and the president follow through and enact regulations that contain the worst excesses of the financial high flyers or will there be a friendly nod to Angelides and his commissions' findings and then deposited in the same dusty file where all the other "commission" hearings are found (and relegated).

To be sure, if "business as usual" continues unabated with our financial "wonder kinds", the next financial crisis is just waiting to happen; only the time and the date are unknown at this time.

[1] "Greenspan: Mistakes a factor in crisis, But former Fed chief defends oversight of subprime market", by Jim Puzzanghera, "The Baltimore Sun", April 8, 2008

[2] See footnote #1

[3] See footnote #1

Next Page  1  |  2

(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).

Rate It | View Ratings

Dave Lefcourt Social Media Pages: Facebook page url on login Profile not filled in       Twitter page url on login Profile not filled in       Linkedin page url on login Profile not filled in       Instagram page url on login Profile not filled in

Go To Commenting
The views expressed herein are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.
Writers Guidelines

Contact AuthorContact Author Contact EditorContact Editor Author PageView Authors' Articles
Support OpEdNews

OpEdNews depends upon can't survive without your help.

If you value this article and the work of OpEdNews, please either Donate or Purchase a premium membership.

If you've enjoyed this, sign up for our daily or weekly newsletter to get lots of great progressive content.
Daily Weekly     OpEd News Newsletter
   (Opens new browser window)

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

An Ominous Foreboding, Israel vs Iran

The Evolving Populist Political Rebellion in the Arab World

A Nuclear War Would Be Insane

The Rich Get Richer, the Poor Get Poorer, While the Middle Class Gets Decimated

CIA in the Crosshairs

Iran Offers 9 Point Plan to end Nuclear Crisis, U.S. "No thanks".

To View Comments or Join the Conversation:

Tell A Friend