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Greenspan Gets Grilled By Financial Crisis Panel

April 13, 2010 by  

Greenspan gets grilled by financial crisis panelWhile admitting that he did make some mistakes during his tenure, Former Federal Reserve chairman Alan Greenspan defended his record last week, arguing that his policy of keeping interest rates low did not contribute to the financial collapse.

Testifying before the Financial Crisis Inquiry Commission, Greenspan, who was chairman of the Fed from 1987 to 2006, was bombarded with questions from panel members who were highly critical of his lack of response concerning irresponsible mortgage lending.

"Very simply, Mr. Chairman, why…did you not act to contain abusive, deceptive subprime lending?" asked panel chairman Phil Angelides. "Why did you allow it to become such an infection in the marketplace?"

In response, Greenspan noted several steps that the Fed took under his leadership to prevent irresponsible lending, and claimed that he made the correct decisions 70 percent of the time, according to Fox News. He refused to mention the specific failures that he felt he was responsible for.

Greenspan also indicated that the Federal Reserve helped to temper the economic recession through the decision he made in the early 2000s, CNN.com reports.

"We did do almost all of the things that you are raising," Greenspan told the panel. "And the consequence of that, I think, is that things were better than they could have been."
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  • http://www.personalliberty.com/news/pediatric-patients-with-chronic-pain-look-to-acupuncture-19609231/ James A Graham

    George Soros, Open Society, Shadow Party
    2008 Market Crash Should be Investigated
    By Jeff Lukens Wednesday, April 7, 2010

    Almost two years after the mortgage crisis and stock market crash, no one seems to wonder about the “September surprise” that shifted the 2008 presidential election to an unknown leftist politician who had been elected to the Senate only two years before. A pulp-fiction writer could hardly have created a more contrived and bizarre story. But this was not make-believe. No, it is now our own gritty reality show that we only wish we could turn off.

    The week of Sept. 15, 2008, was a debacle of huge proportions. On Monday, Lehman Brothers filed for bankruptcy while other lending institutions lined up like dominoes teetering on the edge of bankruptcy. But the week was hardly over. On Thursday, an electronic run on the banks occurred. In an unprecedented move, the Treasury and the Federal Reserve had to act together to stop what had become a full-fledged panic. On Saturday, Sept. 20, The Wall Street Journal recounted events of that previous Thursday:

    “Instead of lining up at bank windows, investors were unloading financial assets on their PCs. Credit markets had seized up, to the point that even routine daily settlements had stopped until banks had the actual securities or cash in hand.”

    “Investors were rushing out of these [Treasury and Federal Reserve] funds—$105 billion out of $1.8 trillion on Thursday alone—which in turn caused the funds to redeem their commercial paper investments.”

    “Issuers of that paper then had to find new funders, which in a pinch are banks. But jittery banks were refusing to accept paper from even worthy companies amid the panic, creating a larger credit breakdown. In response, Treasury will now insure nonbank money-market fund deposits for the next year, to slow money-fund redemptions.”

    For such a large and coordinated exodus of funds to occur in U.S. markets, something more than individual “investors” at their PCs had to be in play. Large and well-managed hedge and mutual funds were undoubtedly behind much of the move.

    A few months later on a C-Span interview, Rep. Paul Kanjorski, House Capital Markets Subcommittee Chair, described that day:

    “On Thursday at about 11 o’clock in the morning the Federal Reserve noticed a tremendous drawdown of money market accounts in the United States , to the tune of $550 billion was being drawn out in a matter of an hour or two. The Treasury opened up its window to help. It pumped $105 billion in the system and quickly realized that they could not stem the tide; we were having an electronic run on the banks. They decided to close the operation, close down the money accounts and announce a guarantee of $250,000 per account so there wouldn’t be further panic out there.”

    The $550 Billion withdrawn in an hour or two that Rep. Kanjorski refers to in his statement has never been independently confirmed or refuted.

    In mid-September, John McCain was ahead of Barack Obama in some polls by about 3 percent. By Oct. 10, the S&P 500 Index had lost 25% of its value from what it had been a month before. The crash was a major calamity for the McCain Campaign. And now, with Obama in the White House, it has become a calamity for us all.

    The fact remains that the identities of those who withdrew their money that week were never disclosed. And, knowingly or not, they created a panic that altered the course of the election. One can only wonder whether something more than normal market forces was at work.

    Courtesy of Barney Frank and Chris Dodd, the crisis came about by the uncertain value of subprime securities held by Fannie Mae, Freddie Mac, banks, saving and loans, and other lending institutions. A declining market in itself is not noteworthy, but to induce a panic in the midst of a presidential campaign, if ever proven, would be reprehensible and an outrage to the American electorate.

    While the stock market collapse was a disaster for your average IRA or 401(k) account, some investors benefited handsomely. It is widely agreed that hedge funds profited by selling short the collapsing market in 2008, and chief among them was George Soros’ hedge fund. Soros may have personally had the motivation, method, and opportunity to trigger the crash.

    Soros’ overseas-based hedge fund evades much scrutiny, and its activities that week left almost no trail. Could Soros and his hedge fund be behind many of the withdrawals of that week, and particularly on that Thursday? We need to know. The massive outflow of U.S. funds to offshore accounts that critical week during the campaign could be a coincidence, but it is doubtful.

    George Soros is a multi-billionaire answerable to no one. Hastening a market meltdown to give the election to Barack Obama would fit his pattern of profiting while destroying the social order of his target country. Triggering a crash in 2008 would also serve his political investments.

    Soros is obsessed with power. He wants a One World Government, redistribution of wealth, open borders, and universal health care. He is determined to change America forever by deconstructing its sovereignty and ability to defend itself. Soros was a huge backer of Barack Obama, and now his anointed president is determined to change America to their mutual view.

    Soros made his fortune by short selling currencies and then pouring substantial amounts of his private wealth into organizations to subvert various nations. He nearly bankrupted the Bank of England by shorting the pound in 1992. He wrecked the Malaysian economy in 1998, and subsequently that of Indonesia as well. He is responsible for stirring-up instability in Africa, the Balkans, Eastern Europe , and the former Soviet republics.

    Over the years, Soros has positioned himself to take control of the Democrat Party through the hundreds of 527 organizations he has helped financed. These organizations have become a “Shadow Party” unto themselves, and manipulate public opinion for their own end.

    Among them: the National Education Association, ACORN, AFL-CIO, American Federation of Teachers, The Media Fund, the Open Society Institute, Planned Parenthood League, the Sierra Club, America Coming Together, the Huffington Post, Moveon.org. If a left-wing organization is in the news, it has probably received money from George Soros.

    Why have the identities never been reported of those who withdrew funds that week? Shouldn’t there be even some curiosity about an event that wiped out the jobs and life savings of so many people? And why has there been no follow-up inquiry by into Rep. Kanjorski’s statement? There needs to be a public investigation concerning the amounts and offshore destinations of the funds withdrawn from U.S. markets that precipitated the crash.

    Did an unwritten partnership exist between George Soros and Barack Obama? Could Soros, through Obama, be seeking a “velvet revolution” in the dismantling of our nation as he has done elsewhere? These questions need further investigation. With the Alinskyite tactics employed by Team Obama, none of this is beyond the realm of possibility.

    Americans recoil at the thought of having their elections manipulated by outsiders. As long as Democrats control Congress, there surely will never be an effective inquiry into this affair. Perhaps a GOP victory this November will allow a thorough examination finally to begin. Add this to the many investigations the GOP will need to make when they finally take back Congress.

    • TIME

      James, Not much can be added to your post.

      Good strong concise observations.

    • Norm

      James A Graham
      Right Jim it was all a plot by democrats, communists, foreigners, and little men from flying saucers.
      The republicans, who were in power for nearly 8 years, and controlled congress for 6, had nothing to do with it. The right wing “don’t touch the private sector lords” policy had nothing to do with it. Greenspan’s 0% interest loans didn’t encourage people to think they were wealthier than they really were. Bankers, driven by greed and stupidity, convinced themselves that home equities would raise by double digits forever, thus allowing houses to pay their own mortgages. But this had nothing to do with it.
      It was all the fault of that commie Obama, who wasn’t even elected yet.

      • walt

        Norm, There are no dumb questions, if it was a conspiricy we should know don’t you think? Or would you rather just poke fun and change the subject? The truth will set us free. Do you know the identities of the of those who withdrew funds that week?

        • s c

          Walt, here’s your chance to ‘grill’ Normy. Ask him to explain how one of his icons [Hillary] can be such an expert on “rightwing conspiracies.” When Normy gets done shucking and jiving, he might even dicover a dab of a functioning conscience.
          Enjoy, Walt. I know the rest of us will.

      • Herrmann

        Norm,

        I doubt any critic of Democrats will penetrate you thick scull.
        But the housing and mortgage bubble was created by Carters CRA Act, amplified by Clinton, who put quotas for undeserving home buyers
        into the CRA, and admittedly was not checked by Bush, who by inclination was more a democrat in his domestic policies.
        But Bush did try to rein in Freddie and Fannie in 2005, which Chris Dodd, Big Mouth Waters, Barney Frank and Greg Meeks sabotaged.

        Yes, the banks and Hedge Funds made money on these securities, but the government mandated the creation of this garbage.

        The justice comes in the fact that this melt down ultimately hurts the supporters of big government more, but you will probably always wonder why.
        And, in 2007, when the Dem’s took over the House and the Senate, unemployment was around 4.7%. Two years later it was around 7.5%
        To really f.u. the economy took a democratic Congress.

    • Susan Tenofsky

      I agree with you wholeheartedly about Soros creating devastating crash.
      It would not be the first time or first country!!!!!!

    • Susan Tenofsky

      James, I agree with you wholeheartedly about Soros creating the crash that killed the Republican’s chance to win Presidential Election completely. It would not be the first country he has succeeded in bringing down!

      I think last reply was lost?

    • Herrmann

      But what specifically did turn the election against McCain, if this was planned to do so???

      Almost nobody heard about this September Surprise, so it did not per se influence the electorate.

      Was it supposed to influence the $$ donors, but how???

  • Raggs

    I still believe the usurper in chief and his ACORNs are the reason behind the subprime mortages which lead to the collapse.

    • Norm

      Raggs
      I bet you do! Don’t forget the martians.

  • s c

    WEATHER ALERT! Hell has frozen over. Herr Greenspan has “almost” admitted that’s he’s mortal (gasp!). Note that he said keeping interest rates low did not contribute to the financial collapse. In plain English, he means that “something else” (e. g., the heavy use of DERIVATIVES) and government interference (ala Bahney Fwank) DID contribute to the financial colapse.
    You see, with someone like Herr Greenspan, it’s NOT what he SAYS. It’s what he MEANS. If you can sift through the pc, quasi-English muck, you might be able to decipher his technobabble.
    With Ben the Boob at the helm (and an elderly Volker in the shadows), I wouldn’t bet on the Fed to be able to boil water, let alone keep the dollar afloat. For those who refuse to have both feet in the real world, how can we tolerate having the HEAD of a PRIVATE CORPORATION [the Fed] control America’s money supply? Apparently, common sense isn’t contagious (or inherited), as America was warned about central banks long ago. FYI (for big government fans), THE FED IS A PRIVATE CORPORATION that enjoys an unconstitutional MONOPOLY, and it has done damned little to make America better or safer.

    • Meteorlady

      The Fed is very powerful and there are at least six major banking corporations that actually participate in it’s operations. When JFK was president he signed an Executive Order (11110) to prohibit the federal government from borrowing money from the Fed. That would have essentially put the Fed out of business. Five days after he signed the EO JFK was dead. I’m not a conspiracy theorist nut case, but when LBJ took office he quietly ignore that EO and it has been ignored by every president since.

  • Norm

    Greenspan got the economy going after Bush’s 2000-2003 recession with his low interest policy. But in doing so he paved the way for the housing blowout and meltdown of 2007. The fed. needs to be very careful about controlling interest rates. Talk about unconstitutional, where are you right wing nuts when you can serve a purpose.

    • TIME

      Da Normie,

      The laws set in place for sub prime Mtg’s were set in when Bill Clinton was the pres, as in the 1990′s, as I recall it was 1994 it was brought up and set in place in 1995, and started in 1996.

      For God sake – when will your gray matter ever start working, -
      OH I forgot, you have way too smooth gray matter so its hopeless.

      • Norm

        TIME
        After Mr. Bush came into office in January 2001, he practiced greater hostility to federal government regulation and intervention in the U.S. economy than any president since Calvin Coolidge, who left office in March 1929.

        http://www.washingtontimes.com/news/2008/sep/09/minimum-government-bush-banks-on-intervention/

        p.s. Why the 3rd grade antics? Ranting and name calling is really not helpful.

      • eyeswideopen

        time, this conservative site, shows where our problems began.
        http://mises.org/freemarket_detail.aspx?control=605

        • TIME

          EW, the issues began in 1913, the President was Woody Wilson, now from there start.

          Thanks for the info, but when looking at a big picture look at the details.

          Normie,, Lets not get your nickers in knot now, you reep back what you plant. You do know what knickers are right?
          And Bubba, GWB spoke to congress in 2004 and stated that the programs started in 1996 were going to bring about massive problems very soon, as I recall he said by 2008. So wow. GWB was in the same club as Nostrdaums, – well not really but hey – you would fall for anyything.

    • Dale

      Bush’s 2000 recession??????? Wasn’t Klinton Pres in 2000???

      Norm . . . how are we going to pay for the Obumbler??? Any good ideas?

      • Norm

        Dale
        We are going to pay for the the deficits the same way you and I pay our bills. That’s cut spending and/or get more money. The government doesn’t earn money they tax it.
        Forget the voodoo tax cut nonensense and the trickle down BS. It’s cute, but it’s just a way that the high rollers justify their greedy egos. It really doesn’t work.
        When the Bush tax cut’s run out this year the top rate will return to 39% from 35%. Cap gains will be taxed as ordinary income, at least in the higher brackets, as well.
        If we can stop playing the master of the world role, and stop declaring war on everybody who doesn’t cave to our wishes, and stop paying people to support us, we could save trillions.

        • Meteorlady

          Norm – name one, just one, large social program that the government currently has that has not over run it’s budget by millions and millions. The government does not cut spending they increase spending along with the size of the government.

          Enjoy your VAT tax Norm because that’s next on the Obama plate.

  • Susan Tenofsky

    I keep waiting for Greenspan plan to be uncovered….he was too smart to allow this market to crash without knowing what was happening!
    Let him be a decent person and expose the Fed!

    • s c

      Susan, in a world that made sense and where common sense prevailed over greed and evil, Greenspan would tell America the truth. In THIS world, Greenspan knows what he can say and what he can’t say. His bosses have too much to hide for him to grow a spine.
      Greenspan will tell the truth the day that he and the rest of America’s other Bernie Madoffs step up to the plate to prove they give a damn about this country.
      For now, truth is a rare commodity, but its day is coming. When that happens, lies will no longer be found in America or the rest of the world. Until then, we do what we can. As for Greenspan and Madoff, their posteriors belong to ‘someone else.’
      Only God can change that.

  • http://att.net Deborah

    Greenspan said, “Congress seems to have a short memory concerning the collapse of the Subprime Mortgages,” and their involvement. The Progressives intentionally collapsed our Financial Markets, so they could implament their Socialist agenda.

  • DaveH

    We need to quit letting the Federal Reserve get away with operating under the radar:
    http://moneynews.com/StreetTalk/Robert-Reich-Fed-No/2010/04/13/id/355563?s=al&promo_code=9BEC-1

  • Dale

    Norm . . . on several occasions first 2003 and then 2005 Bush attempted to reign in Fanny and Freddie . . . but your buddies Fwank and Doddd battled to keep the status quo. Go to utube and watch the videos . . . the dinger Wattters was also battling for the no-qualifications dimmicrap mortgages. The dimmicraps own the housing collapse . . . period!!!

    • Norm

      Dale
      Dodd is a Senator from my state. I never supported him and now he’s history. His Dem replacement, Blumenthal, is a good man.
      As far as Bush attempting to reign Freddy and Fannie, show me.

      • Meteorlady

        Do a search on YouTube regarding Bush and the banking committee. If they haven’t taken it off, you will see Bush actually testifying before the committee. He stated that they were on the verge of a financial meltdown if they did not reign in Fannie and Freddie. You will also see Chris and Barney defending Fannie and Freddie’s policies.

  • karl koebke

    Greenspan the mastermind of ZERO interest and “Irrational Exuberance ” was never questioned about his incompetence. His excuse after the finacial system collapsed was: We didn’t see it coming!

    Acting like a drunken sailor standing on the train track and not seeing the train, hence drunks always have a savior he survived and sued the conductor for endangerment of a fool!

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