“Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief,” he [Greenspan] told the House Committee on Oversight and Government Reform.The NYT article goes on to say, "Many Republican lawmakers on the oversight committee tried to blame the mortgage meltdown on the unchecked growth of Fannie Mae and Freddie Mac, the giant government-sponsored mortgage-finance companies that were placed in a government conservatorship last month. Republicans have argued that Democratic lawmakers blocked measures to reform the companies.
But Mr. Greenspan, who was first appointed by President Ronald Reagan, placed far more blame on the Wall Street companies that bundled subprime mortgages into pools and sold them as mortgage-backed securities. Global demand for the securities was so high, he said, that Wall Street companies pressured lenders to lower their standards and produce more “paper.”
“The evidence strongly suggests that without the excess demand from securitizers, subprime mortgage originations (undeniably the original source of the crisis) would have been far smaller and defaults accordingly far lower,” he said."
It looks more and more, by the words of the 'maestro' himself, that the melt-down was not caused by all those minorities scamming poor bankers, but just the opposite - loose lending to feed the greedy appetites of Wall Street.
This much is for sure, there are a lot of poor folks deserving of a big fat apology and some debt relief from the likes of Greenspan, the Treasury, and the pundits who have been heaping blame on their poor wanton souls over the past weeks. But I won't hold my breath waiting.
James C. Collier
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