In his desperate effort to preserve his legacy, Alan Greenspan has been saying that the only thing that he could have done to stem the housing bubble was to raise interest rates. This would have crashed both the bubble and the economy. It would be good if reporters asked him about alternatives, like imposing the sort of regulations advocated by fellow Fed governor Ned Gramlich in 2000, and just imposed by the Fed yesterday. At the least, these regulations would have stemmed some of the abuses in the mortgage market we saw in the last three years. I would have had Greenspan lay out the case for the existence of the bubble at his congressional testimonies and other public speaking appearances. But, if he has trouble with graphs, at the least he didn't have to deny the existence of a housing bubble, as he did repeatedly over this period. Greenspan failed disastrously in dealing with the housing bubble and he should not be allowed to rewrite history to exonerate himself.
--Dean Baker
