The House Committee on Oversight and Government Reform held a long meeting on Thursday in Washington to discuss the current financial crisis with figures like former Chairman of the Federal Reserve Alan Greenspan and former Secretary of the Treasury, John Snow.At the meeting, Greenspan acknowledges that he may have misjudged the regulatory abilities of the free market.
In response to comments by Representative Henry Waxman, the chairman of the House Committee on Oversight, Greenspan referenced the error.
“I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms,” he says.
Video of his testimony is available through CNBC in conjunction with the New York Times here.
Greenspan testified before the Committee on Oversight so that the committee would better be able to identify how the regulations already in place did not prevent the current financial situation. During his service from 1987 until 2006, Greenspan was a strong proponent of deregulation. His position on derivatives, which are playing a role in the current crisis, has been criticized by some as too lenient.
By the end of his term, the use of derivatives by financial institutions had become widespread and complex which resulted in widespread exposure to risk.
Perhaps in an effort to emphasize the potential for future problems, Greenspan says he “cannot see how we will avoid a significant rise in layoffs and unemployment.”
Click here for the video.
--Bridget O'Sullivan
No comments:
Post a Comment