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Greenspan: Don’t use Fed as a ‘magical piggy bank’
Posted By admin On September 6, 2008 @ 3:51 am In Money Watch | Comments Disabled
Saturday, Sept 6, 2008
Troubled by the Bear Stearns debacle, former Federal Reserve Chairman Alan Greenspan is advocating a new way of dealing with government bailouts of companies whose sudden collapse could wreak havoc on the country’s economic and financial stability.
Greenspan says Congress needs to give the government new powers to handle troubled companies to minimize any potential losses to American taxpayers. A self-described libertarian Republican, Greenspan has a reputation for being wary of giving the government extra powers. However, in crisis situations, there needs to be a clear process for handling bailouts, rather than depending on the Fed to do so, he reckons.
A high-level panel of financial officials should be given broad authority to quickly determine whether a failing company poses a sufficient threat to the entire U.S. economy, he recommends. If so, the company would be shut down.
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“We need laws that specify and limit the conditions for bailouts – laws that authorize the Treasury to use taxpayer money to counter systemic financial breakdowns transparently and directly rather than circuitously through the central bank as was done during the blowup of Bear Stearns,” Greenspan wrote in a new epilogue to the paperback edition of his memoir, “The Age of Turbulence: Adventures in a New World.” (The paperback will be released Sept. 9; the hardcover came out last year.)
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URLs in this post:
 AP: http://apnews.myway.com/article/20080905/D930B0EG1.html
 Greenspan Says Federal Company Would Best Ease Crisis: http://www.prisonplanet.com/greenspan-says-federal-company-would-best-ease-crisis.html
 Greenspan sees house price bottom in 2009: report: http://www.prisonplanet.com/greenspan-sees-house-price-bottom-in-2009-report.html
 Greenspan: Break Up the Big Banks, It Will Be Good for the Economy, Minor Regulation Won’t Work: http://www.prisonplanet.com/greenspan-break-up-the-big-banks-it-will-be-good-for-the-economy-minor-regulation-wont-work.html
 Greenspan: I’m ‘Shocked’ At Breakdown in Credit: http://www.prisonplanet.com/greenspan-im-shocked-at-breakdown-in-credit.html
 US in ‘once-in-a-century’ financial crisis : Greenspan: http://www.prisonplanet.com/us-in-once-in-a-century-financial-crisis-greenspan.html
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