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Greenspan: It wasn't me.

tumblr_kvr2yazZ7G1qauh0s.jpgIn testimony before the Financial Crisis Inquiry Commission yesterday, Alan Greenspan pretty much adopted the Shaggy defense: Interest rates? It wasn't me. Deceptive lending practices? It wasn't me. Unchecked excesses on Wall Street? It wasn't me. They even got us to deregulate! It wasn't me.

Better culprits, according to Greenspan, included the fall of the Berlin Wall, Congress, developing economies, and systemic complexity. Left unanswered is what would've happened had Greenspan walked out and said that there's a global savings glut powering a housing boom that's being repackaged by a finance sector that has become too complicated to regulate and people should proceed with extreme caution and Federal Reserve regulators should adopt a more jaundiced eye.

Ah, well. On the bright side, I agree totally with Greenspan's formulation for the correct response, which is much more an admission of guilt than his introductory remarks would suggest. Greenspan favors "rules [that] would kick in automatically, without relying on the ability of a fallible human regulator to predict a coming crisis. Concretely, I argue that the primary imperatives going forward have to be (1) increased risk-based capital and liquidity requirements on banks and (2) significant increases in collateral requirements for globally traded financial products, irrespective of the financial institutions making the trades."

Full testimony here (pdf). James Kwak has further commentary.

By Ezra Klein  |  April 8, 2010; 8:39 AM ET
Categories:  Federal Reserve , Financial Crisis , Financial Regulation  
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Comments

yes, that was the era of, "it wasnt me," in american politics.

and look at the lasting damage of those years.
i believe that the clinton years did remarkable damage to the country.
arrogance, lying and unnacountability breathed life into the evangelical movement, the tea party contingent, for the presidency of george bush...for the economic crisis....

very longlasting effects that were set into motion by that administration.
and look, they still take not a shred of responsibility for their actions.

Posted by: jkaren | April 8, 2010 9:21 AM | Report abuse

"Greenspan favors "rules [that] would kick in automatically..."

This is total rubbish. There were an embarrassment of rules before -- we have the whole New Deal legislation. But every time one of the monster financial institutions bumped up against something -- say, by going into an area formerly off-limits or coming out with yet another 'innovative' financial product that nobody understood -- the rules were changed.

The size of the banks is the problem. Not the rules that come and go.

Posted by: leoklein | April 8, 2010 10:11 AM | Report abuse

I know this isn't going to be popular, but I think Greenspan's testimony was pretty fair. He admitted that 30% of what he did was incorrect, which seems about right. Remember, his career spanned four presidents, a couple of wars, the dot-com boom and bust, and two recessions. He's not the magic pixie dust holder, and on the whole, he did OK. His problem is that the 30% happened all at once and at the end of his career.

Posted by: philly211 | April 8, 2010 10:23 AM | Report abuse

Shaggy actually got that line from Eddie Murphy who had a whole bit about it in his concert movie "Raw."

Check it out here.

http://www.youtube.com/watch?v=bEovJYZsiDY

Posted by: amorris00 | April 8, 2010 10:30 AM | Report abuse

My favorite analogy here is Greenspan and Pope - both are behaving similarly and equally culpable.

http://www.21stcenturypolitics.com/2010/04/greenspan-pope-benedict-what-is-common.html

Posted by: umesh409 | April 8, 2010 11:52 AM | Report abuse

I don't know what jkaren is smoking, but if the Clinton years did remarkable damage to the country, then the Bush years must have been driving the country into total ruin. Oh wait...

Posted by: zvelf | April 8, 2010 1:11 PM | Report abuse

jkaren missed this passed Sunday's NYTimes article in the Week in Review section which made a strong case for viewing Clinton's policies during his presidency as laying the groundwork for any chance of success for policies during Obama's presidency.

Posted by: goadri | April 8, 2010 3:14 PM | Report abuse

I'm only surprised that Greenscum did not return to his faith in "The Great Moderation" --- that insane belief that like the great Maginot Line, some imaginary "Great Moderation" (along with his superb Fed Management) would miraculously save us all from any possible collapse, while the global corporate/financial/militarist EMPIRE looted the last of US capital.

Looks like Nobel laureate, George Akerlof, was far more accurate (and truthful) than Greenscum, when he said early in the Bsuh administration (and still applicable of the Obama imperial administration) that, "This is not normal government economic policy, but rather a form of LOOTING"!

Alan MacDonald
Sanford, Maine

Posted by: alanmd | April 10, 2010 12:02 AM | Report abuse

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