Thursday, September 13, 2007

Greenspan Weighs In

Throughout the mortgage industry mess of the last few months, I've been wondering what former Fed Chairman Alan Greenspan has to say about all this. For years and years, through Clinton and Bush, his word had been gold. But I couldn't help thinking that some of the policies he put into place led to the current situation--of lenders giving to people who weren't qualified and consumers accepting loans they couldn't handle or couldn't understand.

Well, Greenspan weighs in today as part of an interview that will be airing on 60 Minutes this Sunday night.

The Associated Press reports....

"Former Federal Reserve Chairman Alan Greenspan acknowledges he failed to see early on that an explosion of mortgages to people with questionable credit histories could pose a danger to the economy.

In an upcoming interview, Greenspan said he was aware of "subprime" lending practices where homebuyers got very low initial rates only to see them later jacked up, causing severe payment shock. But he said he didn't initially realize the harm they could do.

"While I was aware a lot of these practices were going on, I had no notion of how significant they had become until very late," he said in a CBS "60 Minutes" interview to be broadcast Sunday. "I really didn't get it until very late in 2005 and 2006," Greenspan said.

An excerpt of the interview was released Thursday."

To read the whole article, click here. What do you the good folks of the Bay Area think about this?

Fun fact--Greenspan's wife is NBC's Andrea Mitchell.

(Photos courtesy of AP and Harry Walker)

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