As a quick follow to Annie’s nice wrap of yesterday’s gathering of the commission investigating the recent financial crack-up, it’s worth noting that Alan Greenspan — once contrite about the “flaw” surrounding his blind trust of free markets — is now making the claim that he’d been warning all along about the looming collapse.
The Washington Post’s Dana Milbank today points out some of the more remarkable parts of Greenspan’s testimony:
“I warned of the consequences of this situation in testimony before the Senate banking committee in 2004,” he informed the commissioners Wednesday. “In 2002 I expressed concern . . . that our extraordinary housing boom, financed by very large increases in mortgage debt, cannot continue indefinitely.”
Milbank then contrasts that with Greenspan’s remarks before the Joint Economic Committee in 2005:
“A bubble in home prices for the nation as a whole does not appear likely.”
“Home price declines . . . were they to occur, likely would not have substantial macroeconomic implications.”
“Nationwide banking and widespread securitization of mortgages make it less likely that financial intermediation would be impaired.”
Perhaps we shouldn’t be surprised that the 84-year-old Greenspan — who was Fed chairman when Wall Street ramped up its interest in subprime loans, mortgage-backed securities, and a few of the other financial instruments that led to the collapse of the global economy — doesn’t want to be remembered as the guy who snoozed while the bubbles inflated. But neither should we let him rewrite history.