Blaming Greenspan
A few articles pulled from the weekend linkfest tell the story of how Housing ended up in its present slide and ongoing "challenging" circumstances.
What is frightfully revealing in the entire mess is the role former Fed Chair Alan Greenspan played in the current situation. We have long been a critic of Easy Al, due to his profligacy with money and his tendency to throw cash at any problem. Indeed, we have in the past viewed him as a more of a Cheerleader than a central banker. We even spent time reviewing some of the myths of the Greenspan era. We have long suspected that his halo would tarnish as his role in the current Housing and other messes became more clearly understood by the public.
But even some of his fiercest critics had to be surprised by the most recent revelation:
"Edward Gramlich, who was Fed governor from 1997 to 2005, said he proposed to Mr. Greenspan in or around 2000, when predatory lending was a growing concern, that the Fed use its discretionary authority to send examiners into the offices of consumer-finance lenders that were units of Fed-regulated bank holding companies.
"I would have liked the Fed to be a leader" in cracking down on predatory lending, Mr. Gramlich, now a scholar at the Urban Institute, said in an interview this past week. Knowing it would be controversial with Mr. Greenspan, whose deregulatory philosophy is well known, Mr. Gramlich broached it to him personally rather than take it to the full board.
"He was opposed to it, so I didn't really pursue it," says Mr. Gramlich, a Democrat who was one of seven Fed governors."
There is a big difference between merely being wrong -- as everone in the forecasting business frequently is -- and corruptly turning a blind eye to inscrupulous if not illegal behavior. It appears that Mr. G. is guilty of both types of malfeasance.
More on this as it develops . . .
>
Sources:
Did Greenspan Add to Subprime Woes?
Gramlich Says Ex-Colleague Blocked Crackdown
On Predatory Lenders Despite Growing Concerns
GREG IP
WSJ, June 9, 2007; Page B1
http://online.wsj.com/article/SB118134111823129555.html
Housing Inventory Build Worsens http://bigpicture.typepad.com/comments/2007/06/housing_invento.html
More Mortgage-Industry Firms Subpoenaed as Probe Expands
CHAD BRAY
WSJ, June 9, 2007; Page A5
http://online.wsj.com/article/SB118133643715729450.html
Monday, June 11, 2007 | 07:12 AM | Permalink
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» Poole: Save Fannie/Freddie, Then Dismantle Them from The Big Picture
Its actually kind of ironic: Two Fed Governors warn Federal Reserve Chief Alan Greenspan about major problems -- and are promptly ignored by the maestro. Ed Gramlich on subprime and predatory lending, and Bill Poole on Fannie and Freddie. In the Sunday... [Read More]
Tracked on Jul 27, 2008 10:03:24 AM
Comments
Barry,
I thought you might be interested in work I did ,showing how consumption of indispensable items
has left less income for discretionary spending , which in turn affects production and consequently the economy.
Posted by: will rahal | Jun 11, 2007 8:18:40 AM
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