Now that the global financial system has collapsed, Greenspan is suddenly a fan of regulation. Under a grilling from Henry Waxman, he admits he “partially” blew it.
Firms that bundle loans into securities for sale should be required to keep part of those securities, Greenspan said in prepared testimony to the House Committee on Oversight and Government Reform. Other rules should address fraud and settlement of trades, he said. Greenspan’s office released the text ahead of the hearing scheduled for 10 a.m. in Washington.
The comments contrast with Greenspan’s aversion to increasing financial supervision as Fed chairman from August 1987 to January 2006. He said in a May 2005 speech that “private regulation generally has proved far better at constraining excessive risk-taking than has government regulation.”
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