Alan Greenspan, Really?

In a recent meeting with the Editorial Board of the Philadelphia Daily News, Hillary Clinton recommended a "high-level emergency group" to address the issue of high-risk mortgages. She suggested that the members might include Robert Rubin (a supporter of hers), Paul Volcker (a supporter of Barack Obama), and Alan Greenspan (a supporter of John McCain). When Greenspan spoke before the Credit Union National Association 2004 Governmental Affairs Conference, Washington, D.C. on February 23, 2004, he stated:

American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage. To the degree that households are driven by fears of payment shocks but are willing to manage their own interest rate risks, the traditional fixed-rate mortgage may be an expensive method of financing a home.


He also has been a champion of deregulation. When he gave the Federal Reserve Board's semiannual monetary policy report to the Congress (before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate on March 7, 2002), Greenspan declared:

Both deregulation and innovation in the financial sector have been especially important in enhancing overall economic resilience. New financial products—including derivatives, asset-backed securities, collateralized loan obligations, and collateralized mortgage obligations, among others—have enabled risk to be dispersed more effectively to those willing to, and presumably capable of, bearing it.

So Senator Clinton was asked by the Editorial Board about her recommendation of the nation's most important economist, who promoted adjustable rate mortgages and deregulation of the financial industry and failed to recognize the housing bubble. She replied:

Not only that, but the Fed didn't act while he was there. But he has a calming influence still to this day on Wall Street -- don't ask me why because I never understand what he's saying -- but nevertheless people respond to that Delphic oracle approach. I think it would be wise to include him. And recently he's come out, and very smartly so, that we have to deal with housing and maybe we need to have some kind of buyout mechanism for mortgages. So he's moved on his understanding and depth of the problem -- but you know you could pick three others. You just have to have some demonstrable involvement of presidential leadership...

We've gone through seven years of an Administration which, with the help of the Congressional Medal of Honor, rewards incompetence at every turn. Calling on a guy who helped bring on the mortgage debacle is no way to address the nation's housing crisis.