Here’s something that probably doesn’t happen too often. Former Federal Reserve chairman Alan Greenspan had a crappier day than you did. He had to admit before our federal government that his free-market, anti-regulation ideology was “flawed.” Ouch.
“Yes, I found a flaw,” Greenspan said in response to grilling from the House Committee on Oversight and Government Reform. “That is precisely the reason I was shocked because I’d been going for 40 years or more with very considerable evidence that it was working exceptionally well.”
The admission that free markets have their faults was a shift for the former Fed chairman who declared in a May 2005 speech that “private regulation generally has proved far better at constraining excessive risk-taking than has government regulation.”
Today Committee Chairman Henry Waxman, a California Democrat, said Greenspan had “the authority to prevent irresponsible lending practices that led to the subprime mortgage crisis.”
“You were advised to do so by many others,” he told Greenspan. “And now our whole economy is paying the price.”
Waxman and other lawmakers repeatedly interrupted Greenspan as he answered their questions, in contrast to deference to his testimony while he was Fed chairman.
Greenspan then claimed that the Fed had no idea how large the subprime mortgage market had become until late 2005, says Bloomberg.