Open

Coming up

Don't miss

Replay


LATEST SHOWS

WEB NEWS

Ukrainians turn Russian 'evidence' into meme

Read more

FOCUS

Copenhagen seeks to decriminalise use of cannabis

Read more

FACE-OFF

French president's advisor resigns: A new blow for François Hollande

Read more

ENCORE!

Films as plays, plays as films and TV at the cinema

Read more

MIDDLE EAST MATTERS

Syria: Former hostages recount 10-month ordeal

Read more

TALKING EUROPE

José Bové, Candidate for the EU Commission presidency, Group of the Greens

Read more

TALKING EUROPE

Alexis Tsipras, Candidate for the EU Commission presidency, European Left Party

Read more

FOCUS

'Pope-mania' hits John Paul II's Polish hometown

Read more

MEDIAWATCH

Fascist finger-pointing

Read more

  • Fatah, Hamas agree to form Palestinian unity government

    Read more

  • New far-right mayor moves to quash Paris region mosque

    Read more

  • Gay marriage, one year on: ‘French civilisation did not crumble’

    Read more

  • Turkish PM offers condolences to descendants of Armenians killed in 1915

    Read more

  • NYPD public relations campaign on Twitter goes awry

    Read more

  • Russia vows to respond if 'attacked' in Ukraine

    Read more

  • In pictures: Violent protests erupt in Rio

    Read more

  • French hostage Gilberto Rodrigues Leal has died, Islamists say

    Read more

  • 'Pope-mania' hits John Paul II's Polish hometown

    Read more

  • French actress Catherine Deneuve to sell €4 million château

    Read more

  • Chelsea, Atletico draw 0-0 in first leg of Champions League semis

    Read more

  • Ukraine to relaunch offensive in the east after politican 'tortured'

    Read more

  • Echoes of 2pac and Biggie? French rap feud turns violent

    Read more

  • New French film tackles grisly anti-Semitic murder

    Read more

  • Photos link ‘little green men’ in Ukraine to Russian troops

    Read more

  • New anti-radicalisation plans aimed at fighting jihadism

    Read more

  • David Moyes sacked by Man United after just 10 months

    Read more

Business

Former Fed chief defends his role in economic crisis

©

Text by News Wires

Latest update : 2010-04-08

Ex-Federal Reserve chairman and financial mastermind Alan Greenspan, under fire following the economic crisis, has told a US government inquiry that low interest rates and loose regulation did not encourage lenders and borrowers to take great risks.

AFP - Former Federal Reserve chairman Alan Greenspan denied his policies encouraged the type of risky lending that spurred the financial crisis, in testimony to a federal investigative panel Wednesday.

Greenspan -- whose reputation as a financial mastermind has been deeply undermined by the crisis -- said regulators could not be expected to predict and prevent crises.

"The recent crisis reinforces some important messages about what supervision and examination can and cannot do," he told a government inquiry into the origins of the crisis.

"History tells us they cannot identify the timing of a crisis, or anticipate exactly where it will be located or how large the losses and spillovers will be," he said.

Greenspan appeared before the committee that was established by President Barack Obama to examine the causes of the most serious economic crisis since the Great Depression.

In sometimes testy exchanges, Greenspan was accused by commission chair Phil Angelides of failing to prevent "abusive and deceptive" subprime home loans from causing the collapse of the housing market.

"You could've, you should've, and you didn't," said Angelides, a former treasurer of California and Democratic gubernatorial nominee for that state.

Greenspan denied that his Fed's policies of low interest rates and loose regulation encouraged lenders and borrowers to take ever greater risks.

"The house price bubble, the most prominent global bubble in generations, was engendered by lower interest rates, but... it was long-term mortgage rates that galvanized prices, not the overnight rates of central banks."

Once seen as infallible, Greenspan has come under withering attack since he left office in 2006 and his account of events was bluntly challenged by Angelides: "I want to make sure we are not rewriting or ignoring history here."

Greenspan admitted there were "an awful lot of mistakes" in his 21 years in office, but that he was right 70 percent of the time.

He said some actions taken in the build-up to the crisis could be included in the 30 percent of times that he was wrong.

After the meltdown, which is thought to have destroyed around seven trillion dollars' worth of housing market value, Obama vowed to rewrite the rules for banks and lenders whose excessive risks prompted the crisis.

Greenspan said that financial institutions must now be asked to keep more cash on hand to cover transactions and that instruments must be backed by high levels of collateral.

On Thursday the commission will hear testimony from Chuck Prince, a former chief executive of Citigroup, a large bank seen as playing a key role in the crisis.

Date created : 2010-04-08

Comments

COMMENT(S)