How Could He Not Know?
The Associated Press tells us: Greenspan admits mistakes in subprime mess
WASHINGTON – Former Federal Reserve Chairman Alan Greenspan acknowledges he failed to see early on that an explosion of mortgages to people with questionable credit histories could pose a danger to the economy.
In an upcoming interview, Greenspan said he was aware of “subprime” lending practices where homebuyers got very low initial rates only to see them later jacked up, causing severe payment shock. But he said he didn’t initially realize the harm they could do.
He didn’t realize the harm they would do to his buddies with money. He didn’t give a damn about the people who took his advice and got an ARM [adjustable rate mortgage] when the mortgage rate couldn’t do anything but go up as the Fed raised rates. He wasn’t a bystander, he advised people to get ARMs in his public testimony.
5 comments
Is it possible for the Federal Reserve to be anything but a tool of the banking elites?
How could a banker not understand that all of these ARMs would cause defaults and both a liquidity and credit crunch. This was a financial disaster waiting to happen.
If they expect to be bailed out, how could we expect them to care?
It was a ponzi scheme. The “gains” never really existed, but the losses are real.
But if the Ponzis get away with it, every time…?