The Worst Centeral Banker in History?

Now everyone is asking questions about Alan Greenspan.  Where was he when the whole housing boom was going on?  The article in NYT looks at how the Greenspan, Bush and the whole goverenment were missing-in-action while the housing boom was going on. 

But when Mr. Gramlich privately urged Fed examiners to investigate mortgage lenders affiliated with national banks, he was rebuffed by Alan Greenspan, the Fed chairman.

 

Don't tell us there was no housing bubble and there was nothing you could do about it.

 

John C. Gamboa and Robert L. Gnaizda of the Greenlining Institute implored Mr. Greenspan to use his bully pulpit and press for a voluntary code of conduct.

"He never gave us a good reason, but he didn't want to do it," Mr. Gnaizda said last week. "He just wasn't interested."

MIA

An examination of regulatory decisions shows that the Federal Reserve and other agencies waited until it was too late before trying to tame the industry's excesses. Both the Fed and the Bush administration placed a higher priority on promoting " financial innovation" and what President Bush has called the "ownership society."

 

More worried about Wall Street than Main Street!

 

The Federal Reserve could have stopped this problem dead in its tracks," said Martin Eakes, chief executive of the center. "If the Fed had done its job, we would not have had the abusive lending and we would not have a foreclosure crisis in virtually every community across America."

 

The Fed sleep at the wheels

 

Mr. Greenspan, hailed as perhaps the best central banker in history when he left the Fed in early 2006, is now feeling defensive. In an extensive interview last week, he adamantly disputed the assertion that he could have prevented the mortgage bust.

And now the Worst Central Banker ever?  Calling the biggest housing bubble ever just froth?

Mr. Greenspan and other Fed officials repeatedly dismissed warnings about a speculative bubble in housing prices. In December 2004, the New York Fed issued a report bluntly declaring that "no bubble exists." Mr. Greenspan predicted several times — incorrectly, it turned out — that housing declines would be local but almost certainly not nationwide.

 

In 2000, Mr. Gramlich privately urged the Fed chairman to send examiners into the mortgage-lending affiliates of nationally chartered banks. Many of them, like Bank of America 's affiliate, had already come under fire from state regulators and consumer groups. Fed examiners, Mr. Gramlich argued, could clean up those practices from the inside.

 

Easy Al has been busy replacing one bubble with a bigger bubble.  His easy money policies have led to the spend like there is no tommorow culture.  When the fed chairman says ARMs would have been a better choice for last decade, he is basically recommending the ARMs vs. fixed rate mortgages (Financial Innovations.)

 

http://www.nytimes.com/2007/12/18/business/18subprime.html?_r=1&hp&oref=slogin