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I linked to The New York Times' reassessment of Greenspan yesterday, but this bit really makes him look bad:
Mr. Greenspan said that Wall Street could be trusted. “There is a very fundamental trade-off of what type of economy you wish to have,” he said. “You can have huge amounts of regulation and I will guarantee nothing will go wrong, but nothing will go right either,” he said.Later that year, at a Congressional hearing on the merger boom, he argued that Wall Street had tamed risk.“Aren’t you concerned with such a growing concentration of wealth that if one of these huge institutions fails that it will have a horrendous impact on the national and global economy?” asked Representative Bernard Sanders, an independent from Vermont.“No, I’m not,” Mr. Greenspan replied. “I believe that the general growth in large institutions have occurred in the context of an underlying structure of markets in which many of the larger risks are dramatically — I should say, fully — hedged."Many of the larger risks are fully hedged." And that wasn't an idle prediction: Markets trusted Greenspan. Investors trusted Greenspan. Legislators trusted Greenspan. Policy was made off of those pronouncements. Now, no man is infallible, and maybe this points to the fact that Congress was abdicating its own responsibility by giving Greenspan such wide berth and neglecting the need to develop more internal expertise. But it's odd that a conversation which has managed to include the Community Reinvestment Act of 1977 and Phil Gramm has not had much to say about Alan Greenspan or the approach he pioneered. It seems like that kind of analysis would actually be useful to policymakers and income administrations.
