Greenspan says goal of housing trumped all

April 7, 2010 at 2:22 PM
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WASHINGTON, April 7 (UPI) -- Former U.S. Federal Reserve Chairman Alan Greenspan said Congress would have intervened had the central bank tried to slow down the risky housing bubble.

Testifying for the Financial Crisis Inquiry Commission in Washington, Greenspan said there was "a fairly broad consensus" concerning a goal of supporting housing and that "Congress would have clamped down on us," had the Fed interfered with that goal, The New York Times reported Wednesday.

Greenspan, who said the Fed issued warnings about risky lending in 1999 and 2001, met with harsh questioning from Brooksley Born, a member of the panel examining the causes of the financial crisis.

Born said Greenspan "appropriately" considered regulation "preventative" in nature. "But the Fed utterly failed to prevent the financial crisis ... the housing bubble … predatory lending … (and) our biggest banks and holding companies from engaging in activities that would bring them to the verge of collapse," she said.

Greenspan said it was inaccurate to assume "my views on regulation were predominant and effective at influencing the Congress."

Greenspan also said banks have not had large enough cushions to survive unassisted for the past 40 to 50 years.

"There's a lot of amnesia emerging, apparently," he said.

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