Question: Who could have known that deregulating the entire financial industry could lead to a disaster of such monumental proportions?
Former Federal Reserve Chairman Alan Greenspan, describing the current financial crisis as a “once-in-a-century credit tsunami” acknowledged Thursday that the crisis has exposed flaws in his thinking and in the workings of the free-market system.
Greenspan told the House Oversight Committee that his belief that banks would be more prudent in their lending practices because of the need to protect their stockholders had been proven wrong by the current crisis. He called this a “mistake” in his views and said he had been shocked by that.
Greenspan said he had made a “mistake” in believing that banks in operating in their self-interest would be sufficient to protect their shareholders and the equity in their institutions. […]
Greenspan said that the current crisis had “turned out to be much broader than anything that I could have imagined.”
Answer: Anyone who witnessed (and paid attention to) what happened to the Savings and Loan industry in the 1980’s after it was deregulated, Mr. Greenspan. In other words, those deregulated S&L’s did the same thing the investment banks and mortgage lenders did when they were let off their regulatory leash. They went hog wild with greed, and started running their businesses as if no transaction was too risky or stupid to make. After all, they were playing with other people’s money.
So ends another Question and Answer session brought to you by the good folks at We_arent_as_stupid_as_Alan_Greenspan.com.*
* Not a real website. Yet.
Update [2008-10-23 14:3:25 by Steven D]: A word from John “No Regrets” McCain:
Very very pertinent. And SO FUCKING ANNOYING!! We saw ALL THIS SHIT THEN, and WE ARE SEEING IT AGAIN.
It’s enough to make me think thoughts (which I am not going to act on) about seeking and administering rough justice to these bankers, thieves, and criminals on Wall Street. Somebody needs to pay, and pay a huge cost.
Somebody’s already beat you to the punch, as it were.
Fun times we live in.
They’re about to get a whole lot more fun and soon.
Who could have known that a guy who made little sparkling starbursts all over Ayn Rand’s godawful novels was completely unfit for a job requiring economic expertise?
Back when I was in the Navy, I was talking with an officer I didn’t recognize and after he learned that I was the Supply Petty Officer for my department, he asked me how his program for dealing with hazmat had worked. He was visibly shocked when I told him that I had experienced all sorts of “hate and discontent” when dealing with it and that his people really screwed up badly.
Why hadn’t he seen any of this before? Simple. Those very same people were in charge of evaluating how well they were doing their jobs. This was a violation of a fundamental principle. No matter much you think you can trust a group of people to be honest and reliable, you can’t.
To his credit, he immediately recognized his error and I didn’t need to press the point, but it’s a pretty basic, simple rule that should never have been violated.