Greenspan 'Didn't Really Get' Mortgage Boom

From Staff Reports

Just a week after he said that market bubbles were human nature, former U.S. Federal Reserve Chairman Alan Greenspan now says that he didn't really get" how the boom in subprime lending might hurt the economy, according to CBS Television and Bloomberg News.

Greenspan also endorsed how his successor – current Fed Chairman Ben S. Bernanke – is handling the current mortgage mess and accompanying market turmoil.

Current Fed Chairman Ben S. Bernanke "is doing an excellent job," Greenspan said in an interview on the 60 Minutes program, according to excerpts e-mailed by CBS before the publication of Greenspan's book, " The Age of Turbulence."

Many investors have criticized Bernanke for not having responded fast enough, or aggressively enough to the cure the current subprime mortgage crisis that has gone global. They wanted him to cut interest rates, which he's refused to do to bail out speculators.

Greenspan, on the other hand, said that back during his stewardship, the backdrop was different: Inflation was easing, for instance, he said in the interview: "We were dealing in an environment back there where inflation was easing," Greenspan said, according to the excerpts. "We could have acted without the fear of stoking inflationary pressures. You can't do that anymore."

Related News and Story Links:

• Bloomberg News:
  Greenspan Says He Failed to Foresee Subprime Rout.
• Money Morning:
  Greenspan: Market Bubbles are Human Nature.