Now that Greenspan has thrown in the towel, the free market ideologues have lost one of their most loyal advocates. From Bloomberg:
Former Federal Reserve Chairman Alan Greenspan called for tighter regulation of financial companies, distancing himself from the free-market culture that he helped to create.
Firms that bundle loans into securities for sale should be required to keep part of those securities, Greenspan said in prepared testimony to the House Committee on Oversight and Government Reform. Other rules should address fraud and settlement of trades, he said. Greenspan’s office released the text ahead of the hearing scheduled for 10 a.m. in Washington….
Today, the former chairman asked: “What went wrong with global economic policies that had worked so effectively for nearly four decades?” During his term at the Fed’s helm, Greenspan repeatedly warned lawmakers against inhibiting markets, such as by tightening oversight of certain types of derivatives.
Greenspan, reiterated his “shocked disbelief” that financial companies failed to execute sufficient “surveillance” on their trading counterparties to prevent surging losses. The “breakdown” was clearest in the market where securities firms packaged home mortgages into debt sold on to other investors, he said.
Shocked, shocked? Greenspan really has no sense of irony.