Dollars and Jens
Wednesday, April 07, 2010
causes of the financial crisis
Mr. Greenspan sought to lay blame for the crisis on international economic forces that were pouring money into the U.S. real-estate market, as well as on domestic political pressures to boost homeownership.Better regulation by a dictator would have been conceivable. It's possible that, in a political democracy, the regulation we had was rather closer to as good as it was going to get.
He singled out the congressionally chartered mortgage companies, Fannie Mae and Freddie Mac, which were major consumers of subprime mortgages. Republicans on the commission, particularly former Bush administration adviser Keith Hennessey, echoed that concern.
Mr. Greenspan suggested that Fed critics have lost sight of the political atmosphere that prevailed at the time. "I mean, I sat through meeting after meeting in which the pressures on the Federal Reserve—and on, I might add, all of the other regulatory agencies—to enhance lending were remarkable."
