Via Calculated Risk, from the Wall Street Journal, Alan Greenspan confesses error:
The panel chairman, Henry Waxman (D., Calif.) criticized Mr. Greenspan’s approach to mortgage regulation while he was Fed chairman. The Fed “had the authority to stop the irresponsible lending practices that fueled the subprime mortgage market,” Waxman said, but Mr. Greenspan “rejected pleas that he intervene.”
…
[W]hen Mr. Waxman pressed “were you wrong” about the benefits of deregulation, Mr. Greenspan responded, “partially.” The “flaw” in the assumptions he had over four decades, Mr. Greenspan said, was that lending institutions themselves were best able to protect the interest of their shareholders.
It’s odd, really. Doesn’t Greenspan’s economic theory tell him that people act in their own interests? Haven’t the Republicans, with Greenspan’s active connivance, built an economic system that absolutely allows the people who run these banks to act in their own interests. And why should anyone believe that the interests of the avaricious CEOs and shareholders correspond? In fact, the interest of the CEO is to acquire as much money as s/he can in as little time, damn the long term consequences to anyone but themselves. This is entirely consistent, isn’t it, with the Ayn Rand way of thinking. If I can get bonuses of mega millions a year while the getting is good, why should I care if the company tanks after I’ve socked my mega-millions away, particularly when I know that I won’t suffer any adverse consequences and that I may even keep getting those bonuses even after my incompetence is found out.
In fact, it’s we liberals who have understood for years that these people will act in their own interests, and that only the restraining hand of government would stop them.
Post a Comment