Greenspan questions 'super fund' plan

Oct. 19, 2007 at 3:59 PM
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NEW YORK, Oct. 19 (UPI) -- Alan Greenspan, the former chairman of the US. Federal Reserve, raised serious doubts Friday about a bailout “super fund” proposal.

The proposed $75 billion investment fund would be used to buy the assets of troubled investment vehicles. Greenspan said the plan, offered by Citigroup, Bank of America and JP Morgan Chase, with the backing of the U.S.Treasury, could undermine confidence in credit markets, the Financial Times reported.

In an interview with Emerging Markets magazine, Greenspan said the proposed multi-billion-dollar fund could prevent the market from establishing true clearing prices for asset-backed securities.

Greenspan said he worried the super-fund could have an “adverse” impact on market sentiment by leading investors to believe that “some form of artificial non-market force” was propping up prices.

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