When he used to appear before Congress during boom times, Alan Greenspan was worshipped as a hero. The Washington Post’s Bob Woodward wrote an insider’s, book-length Valentine dubbing him the maestro. That was a stark contrast to the bruising the former Fed chair took this week from the panel appointed to investigate the financial meltdown. The reviews of his performance were even tougher.
No wonder. Greenspan lamely tried to evade responsibility for the policies he orchestrated that led to the worst economic crisis since the Depression. CBS Econwatch blogger Jill Schlesinger labeled Greenspan’s appearance “ a trip to the land of denial.”
Brooksley Born, one of the commissioners on the Financial Crisis Inquiry Commission, bluntly told Greenspan that the Fed “failed to prevent the housing bubble, failed to prevent the predatory lending scandal, failed to prevent the activities that would bring the financial system to the verge of collapse.”
A little historical context: Greenspan helped undermine Born’s efforts to regulate derivatives when she was head of the Commodities Futures Trading Commission in the Clinton Administration.
Frederic Sheehan, who’s written several books lambasting Greenspan and the Fed, credited the panel with doing a decent job in preparing for his testimony. Sheehan noted that Greenspan wasn’t used to having to answer follow-ups and seemed stumped. When he used to appear before the Senate as Fed chief, senators “were afraid, they didn’t want to look foolish in asking simple questions. A lot of the really simple questions are the ones that are still unaddressed or need to be addressed but never were when he was Fed chairman, particularly about money and credit. He walked away from those questions again today.”
One common theme in reviewing Greenspan’s performance was incredulity at his assertion that he was caught by surprise by the mortgage crisis. Diane E. Thompson, an attorney with the National Consumer Law Center, said in an interview with Washington Independent’s Anne Lowrey that she and other members of the Federal Reserve’s Advisory Council started warning Greenspan about mortgage problems in the early 2000s.
Meanwhile Angelides has problems of his own. Members of his panel complained to the New York Times that he seemed more interested in headline-grabbing hearings than deep investigation, that the panel had wasted too much time getting started and had issued no subpoenas even though it has the power to do so. As David Dayen writes on Firedoglake, “If anyone was watching this but me and the WSJ, they would have seen a cornered rat. Born nailed Greenspan – although, given the relative lack of interest in the FCIC, the benefit to that will be merely psychic in nature.” Stay tuned….