By Mike Whitney
09/17/07 “ICH” — – Alan Greenspan’s appearance on 60 Minutes was preceded with all the pomp and ceremony of a royal wedding. The public relations blitz dragged out for a whole week.
What profound truisms would the elusive former-fed master divulge to the News Magazine’s withered-coquette, Leslie Stahl? Would he produce his crystal ball and forecast America’s blurry economic future in mangled Fed-speak? Or would he focus on the startling gyrations in the stock market and the “frothy” conditions in the slumping housing market? The suspense was nearly unbearable.
“Why didn’t you stop the illegal or shady practices you knew were taking place in subprime lending?” Stahl inquired.
“Err, I had no notion of how significant these practices had become until very late. I didn’t really get it until late 2005 and 2006”, Greenspan replied nervously adjusting his tie.
Hmmmmm. That’s not exactly true, Maestro. In fact, here’s what Greenspan said as chairman at the Federal Reserve System’s Fourth Annual Community Affairs Research Conference, Washington, D.C. April 8, 2005.
“Innovation has brought about a multitude of new products, such as subprime loans and niche credit programs for immigrants. Such developments are representative of the market responses that have driven the financial services industry throughout the history of our country. With these advance in technology, lenders have taken advantage of credit-scoring models and other techniques for efficiently extending credit to a broader spectrum of consumers.”