Former Federal Reserve Chairman Alan Greenspan has spent a lot of time on the road since handing the reigns of the Fed over to Ben Bernanke back in February of 2006. First he wrote this big, heavy book and did the talk show circuit to promote it, then he launched the Ã¢â‚¬Å“ItÃ¢â‚¬â„¢s Not My FaultÃ¢â‚¬Â tour where he told anyone willing to listen that he was not responsible for the worldÃ¢â‚¬â„¢s financial ruin. Now it seems, he has kicked off the Ã¢â‚¬Å“Mea CulpaÃ¢â‚¬Â tour. Get your tickets now Ã¢â‚¬â€œ theyÃ¢â‚¬â„¢re going fast!
On October 28th, Greenspan was called before the Government Oversight Committee in the House of Representatives to defend his record. Greenspan opened his statement by saying, Ã¢â‚¬Å“We are in the midst of a once-in-a-century credit tsunamiÃ¢â‚¬Â.
Phew! ThatÃ¢â‚¬â„¢s a relief. If we only have to worry about this happening once a century, then I wonÃ¢â‚¬â„¢t be around for the next one.
But it seems that members of the Committee Ã¢â‚¬â€œ at least the Democrats on board Ã¢â‚¬â€œ would have none of it. As Governor of the Federal Reserve, Greenspan was ultra-supportive of free markets and it is on this issue that they intended to attack what they perceived to be his AchillesÃ¢â‚¬â„¢ Heel.
Ã¢â‚¬Å“The list of regulatory mistakes and misjudgments is long,Ã¢â‚¬Â stated Committee Chair Henry Waxman, determined to set the tone early in to the session.
Under intense questioning, Greenspan refused to take on any personal responsibility for the crisis but in his statement did admit to certain Ã¢â‚¬Å“flawsÃ¢â‚¬Â in the financial system that have left him in a Ã¢â‚¬Å“state of shocked disbeliefÃ¢â‚¬Â. It seems that the former Governor now finds it Ã¢â‚¬Å“shockingÃ¢â‚¬Â that the banking system failed to operate in a manner that best served the interests of shareholders, the general public, and even the system itself.
Given all that he knows now and upon thoughtful reflection, Greenspan Ã¢â‚¬â€œ grudgingly Ã¢â‚¬â€œ now feels more regulation may be appropriate.
Ã¢â‚¬Å“As much as I would prefer it otherwise,Ã¢â‚¬Â Greenspan noted in his statement, Ã¢â‚¬Å“in this financial environment I see no choice but to require that all securitizers retain a meaningful part of the securities they issue. This will offset in part market deficiencies stemming from the failures of counterparty surveillance.Ã¢â‚¬Â
File this in the Ã¢â‚¬Å“Too Little, Too LateÃ¢â‚¬Â folder.
Once seen as an icon and basically worshipped by many members of Congress, Greenspan now just seems a defeated, old man. And I donÃ¢â‚¬â„¢t mean any disrespect when I say that. To his credit, Greenspan had his hand on the tiller for eight years Ã¢â‚¬â€œ and those were eight pretty good years. ItÃ¢â‚¬â„¢s almost a shame that itÃ¢â‚¬â„¢s what happened immediately after his tenure and the malaise that took root during his watch that threatens to now define his legacy. ThatÃ¢â‚¬â„¢s enough to make any one look old and tired.
Ã¢â‚¬Å“A critical pillar to market competition and free markets did breakdown. I still do not fully understand why it happened,Ã¢â‚¬Â Greenspan added, opting to fall back on the Ã¢â‚¬Å“I didnÃ¢â‚¬â„¢t knowÃ¢â‚¬Â defense.