Six Years Ago, Greenspan Admitted a Mistake

In a story on October 23, 2008, the New York Times online described Alan Greenspan’s appearance before the House Committee on Oversight and Government Reform. The story can be found at: http://www.nytimes.com/2008/10/24/business/economy/24panel.html 

Greenspan was 82 years old and had retired as Chairman of the Federal Reserve three years before that.  He admitted that a part of the crash had been caused by inadequate regulations of derivatives called credit default swaps, even though he had successfully argued against regulation as early as 1994.

Representative Henry Waxman of California asked Mr. Greenspan, “Do you feel that your ideology pushed you to make decisions that you wish you had not made?”

Mr. Greenspan answered, “Yes, I’ve found a flaw. I don’t know how significant or permanent it is. But I’ve been very distressed by that fact.”

The article continues, “Mr. Greenspan, along with most other banking regulators in Washington, also resisted calls for tighter regulation of subprime mortgages and other high-risk exotic mortgages that allowed people to borrow far more than they could afford.”

The reason I bring this up now is that a link to the original article about Mr. Greenspan’s admission appeared today out of the blue.  It’s ancient history now, except that Republicans are still trying to claim that markets don’t need regulation and rich people don’t need to be taxed.

Yesterday, Henry Paulson wrote an op-ed arguing for a carbon tax to restore balance in the markets and enhance our efforts to reduce global warming.  So far, there has been complete silence from the conservative wing– no response to the defection of a conservative icon.