Greenspan Was `Cheerleader for Imprudence,' James
Grant Says
By Jeremy R. Cooke
Oct. 23 (Bloomberg) -- Former Federal Reserve
Chairman
Alan Greenspan
fueled Wall Street's stumbles by cutting rates so low they
encouraged the use of borrowed money to boost returns,
said
James Grant, editor of Grant's
Interest Rate Observer.
The turmoil in credit markets, worsened by excessive leverage
Greenspan's tenure, shattered the idea that the Fed and its
chairman from 1987 to 2006 were ``in perfect control'' of steering
the U.S. economy, said Grant, founder of the financial newsletter that bears his
name.
``The biggest mistake was inciting people to do imprudent
things,'' Grant said in an interview on ``Night Talk'' with
Mike Schneider to be broadcast
later today on Bloomberg Television. ``He didn't have to be a
cheerleader for imprudence.''
Greenspan said today at a Capitol Hill hearing that he was
``partially'' wrong for opposing the regulation of derivatives over
the years. The former Fed chairman endured hours of questions from
lawmakers seeking answers to what caused the financial crisis that
has upended Wall Street and slowed the national economy.
``Mr. Greenspan, our former chairman or former clairvoyant, was
and is marble-mouthed,'' Grant said. ``He can't simply say,
`I was as blind as those I pretended to lead.' This sense of
security that people invested in the idea of perfect control by an
all-knowing brain at the top, that idea's been
shattered.''
To contact the reporter on this story:
Jeremy R. Cooke in New York at
[email protected].
Last Updated: October 23, 2008 18:15 EDT
http://www.bloomberg.com/apps/news?pid=20601087&sid=afRzA77kO4go&refer=home
