This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Greenspan Lists Credit Crisis 'Perps'

Greenspeak is back! Former Fed Chairman Alan Greenspan testified today before the Financial Crisis Inquiry Commission. His testimony before the commission brought back memories of 21 years of congressional appearances. These sessions were often dominated by obfuscation and broad philosophical views from earth orbit perspective, far beyond the concept of a 30,000 foot overview.

There was no obfuscation by Greenspan about whose fault the credit crisis and housing bubble wasn't. It wasn't his.

After getting past that point, the former chairman's clarity of view became a little more clouded. At various times today he identified a number of 'perps.' Here follows a list of those who created the problems.

It's Fannnie's Fault

Greenspan says that the extent to which Fannie Mae was participating in the securitization of subprime mortgages was not evident until September 2009. This undercut the efforts of the Fed to reduce risky lending. He stated that it was the participation of GSEs in the subprime market that drove up home prices.

It's Congress' Fault

He stated it was Congress' responsibility to develop regulation, not the Fed. Greenspan also said, "That my views were predominating and effective in influencing the Congress is something you may perceive, but it didn't look that way from my perspective." This response followed a question from Brooksley Born: "Did your belief in deregulation have any impact on the level of regulation in the U.S. and across the world?"

It's the Fault of the Credit Markets

Greenspan denies that short- term rates set by the Fed had anything to do with the credit bubble and the housing bubble. He maintained that mortgages are pegged to longer term rates and those are determined by the market.

It's the Fault of Non-Banker Mortgage Originators

Greenspan said the most problematic mortgages were originated by non-bank brokerages. (Note 1: Later he said that origination of subprime mortgages was not a significant problem.) (Note 2: At another time, he said far greater enforcement against misrepresentation and fraud was needed.) (Note 3: Greenspan also said that the Fed regulation had been partially effective in preventing banks from issuing the worst mortgage products. See "It's Fannie's Fault" previously.)

It's the Fault of the 'Person Responsible'

The reason the Fed did not take more action to issue regulations regarding mortgages, according to Greenspan, was that 'the person responsible' did not bring it to the Fed's attention. Of course, Greenspan also said, previously in the testimony, that he had warned the Fed Open Market Committee in 2002 that the housing boom could not continue. (Note: 2002 FOMC meeting notes did not become public until 2007.)

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs