facebook
twitter
search
search

Greenspan: U.S. suffering 'credit tsunami'

Oct. 23, 2008 at 12:06 PM
| License Photo

WASHINGTON, Oct. 23 (UPI) -- Former Federal Reserve Chairman Alan Greenspan Thursday told a House panel the United States is "in the midst of a once in a century credit tsunami."

Testifying before the House Committee on Oversight and Government Reform, Greenspan said he warned in 2005 of possible dire consequences of underestimating risk but not even he could have guessed at the scope and it has left him in a state of "shocked disbelief."

"We are in the midst of a once in a century credit tsunami," Greenspan said. "Central banks and governments are being required to take unprecedented measures. …

"The crisis, however, has turned out to be much broader than anything I could have imagined. It has morphed from one gripped by liquidity restraints to one in which fears of insolvency are now paramount."

Greenspan blamed the crisis on risk-management models that just used data from the past two decades, which he said was "a period of euphoria."

"Had instead, the model's been fitted more appropriately to historic periods of stress, capital requirements would have been much higher and the financial world would be in far better shape today, in my judgment," he said.

Greenspan, however, was optimistic.

"This crisis will pass, and America will reemerge with a far sounder financial system," he said.

Like Us on Facebook for more stories from UPI.com  
Latest Headlines
Top Stories
Israeli military calls up reserves for surprise drill
Kim Jong Un pays respects to China's fallen soldiers
No reports of injuries after 6.9-magnitude earthquake in Alaska
Oklahoma Supreme Court denies rehearing, again orders removal of Ten Commandments statue
Plane crash kills four in Wisconsin