4/07/2010

Greenspan finally blames Congress for pressure to make bad loans

Why so long to make this argument? I could speculate that he thought that they would go easy on him if he didn't go after them.

Mr. Greenspan sought to lay blame for the crisis on international economic forces that were pouring money into the U.S. real-estate market, as well as on domestic political pressures to boost homeownership.

He singled out the congressionally chartered mortgage companies, Fannie Mae and Freddie Mac, which were major consumers of subprime mortgages. Republicans on the commission, particularly former Bush administration adviser Keith Hennessey, echoed that concern.

Mr. Greenspan suggested that Fed critics have lost sight of the political atmosphere that prevailed at the time. "I mean, I sat through meeting after meeting in which the pressures on the Federal Reserve—and on, I might add, all of the other regulatory agencies—to enhance lending were remarkable." . . .




Greenspan: "While the roots of the crisis were global, it was securitized US subprime mortgages that served as the crisis' immediate trigger. The surge in demand for mortgage back securities was heavily driven by Fannie Mae and Freddie Mac which were pressed by the Dept of Housing and Urban development and the Congress to expand affordable housing commitments."

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