April 11, 2010
Alan Greenspan put in another Oscar winning performance before the Financial Crisis Inquiry Commission on Wednesday. The ex-Fed chairman showcased the full-range of his abilities. He was alternately condescending, professorial, combative, engaging, and acerbic. It was vintage Greenspan with all that entails; the tedious jabber, the crusty rejoinders, the endless excuse-making. At 80, Maestro still hasn’t lost a step. No one laid a glove on him, which is precisely the problem.
It’s galling that, after everything that’s happened, 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 wants, another playful sparring-match with Alan Flim-flam. They want 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 fidgeting, no flickering look of self-doubt, no sudden outburst of regret. Nothing at all. Just the brazen buck-passing of a self-admiring codger trying to pluck his reputation from the scrapheap.
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. The litany 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 a 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.”
Right. So now congress is to blame. Has Greenspan ever taken responsibility for anything in his entire life?
Perhaps, the best exchange was between Greenspan and Brooksley E. Born, the former commodities regulator who tried to stop Greenspan and Co. from deregulating derivatives. Born lost the battle and, eventually, her job. Here’s a clip from the New York Times:
“The Fed utterly failed to prevent the financial crisis,” Born said. “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.”
Mr. Greenspan replied that there was a failure: an underestimation of the “state and extent” of financial risks and the ability of private counterparties to assess them.
“The notion that somehow my views on regulation were predominant and effective at influencing the Congress is something you may have perceived,” he said. “But it didn’t look that way from my point of view.” (“Fed Reviews Find Errors in Oversight of Citigroup” Eric Dash, New York Times)
That’s right; no one paid attention to “Maestro”, to “The Oracle”, to the “Greatest Central Banker of all Time”. Greenspan would have us believe that congress regarded him as some piddling, paper-shuffling bureaucrat who could be dismissed with a wave of the hand. What utter nonsense. What a shameful, cowardly man. Instead of regret or contrition, all he thinks about is covering his ass.