Alan Greenspan is testifying today on Capital Hill, trying to defend his record. He is taking fire for his promotion of ultra-low interest rates and especially for his defense of securitization markets and their ability to broaden the homeownership profile of this country.
Greenspan has much to answer for, but for that matter so does everyone in Washington. He may have cheered the securitization markets, but our current administration has turned Fannie and Freddie Mac into a housing "public utility," to quote Barney Frank.
Greenspan, to his credit, showed up for this joke of a hearing by the Financial Crisis Inquiry Commission. If you think I'm exaggerating when I call this a joke, look at the Chairman. It is none other than Phil Angelides, one of the people most directly responsible for California's slide into fiscal abyss.
Today's outbursts from Angelides:
"Why, in the face of all that, did you not act to contain abusive, deceptive subprime lending?" Angelides, a former California state treasurer, asked Greenspan.
Greenspan pointed to a series of actions he said the Fed took. Angelides countered that the Fed's actions covered only 1 percent of the subprime lending market.
"You could've, you should've and you didn't" regulate the lending activities, he said.
Angelides is remarkable because he has caused destruction on multiple fronts. In the private sector, he championed the very communities that were financed by the low rates and creative financing he now lambastes Greenspan for enabling.
Angelides' contribution to the housing crisis can be found in the Laguna West development in Elk Grove California, which is just outside Sacramento. Homes there are currently selling for $100-150 per square foot, less than half of what they fetched a couple years ago thanks to the financing and low rates Angelides is now decrying.
That's child's-play however, compared to Angelides role in - literally - wrecking the State of California. In his role as state treasurer, Angelides served as a trustee for the state's two largest pensions, which according to a new Stanford Study could be underfunded by several hundred billion dollars, depending on return assumptions:
Part of the shortfall also is due to the giveaway under Angelides' watch, which reduced the retirement age for his biggest campaign donors - California's public employees.
In a nation where everyone became a mini-Gordon Gekko LBO artist, there is no room for snotty tirades like the kind Angelides is hurling towards Alan Greenspan.
Copyright 2010 AlphaNinja