Friday, October 10, 2014

US History 1973 - 2014 Commonplace Book: Lecture 28, The Crash of 2008 and the Great Recession (Con't)

WAXMAN: ...[T]his is your statement — “I do have an ideology. My judgment is that free, competitive markets are by far the unrivaled way to organize economies. We’ve tried regulation. None meaningfully worked.” That was your quote. You had the authority to prevent irresponsible lending practices that led to the subprime mortgage crisis. You were advised to do so by many others. And now our whole economy is paying its price. Do you feel that your ideology pushed you to make decisions that you wish you had not made?
GREENSPAN: ...Everyone has [an ideology].... The question is whether it is accurate or not. And what I’m saying to you is, yes, I found a flaw. I don’t know how significant or permanent it is, but I’ve been very distressed by that fact.... [A] flaw in the model that I perceived is the critical functioning structure that defines how the world works, so to speak.
WAXMAN: In other words, you found that your view of the world, your ideology, was not right, it was not working?
GREENSPAN: That is — precisely. No, that’s precisely the reason I was shocked, because I had been going for 40 years or more with very considerable evidence that it was working exceptionally well.

—Exchange between Representative Henry Waxman (D - CA) and former Fed Chairman Alan Greenspan, October 23, 2008
Introduction to (and explanation of) this quote series can be found here.  Read this tag to see all of them.

No comments: