Bailout Report

Did Alan Greenspan let the nation’s economy slip through his legs? Or legacy?

Speaking to the House Committee on Oversight and Government Reform, former Fed Chairman Alan Greenspan admitted “I made a mistake” and “found a flaw” in the complex of assumptions with which he governed the nation’s monetary system for 18 and a half years.  To prevent another “once-in-a-century credit tsunami”, he provided two points of guidance to the Committee:

• “Whatever regulatory changes are made, they will pale in comparison to the change already evident in today’s markets…  Those markets for an indefinite future will be far more restrained than would any currently contemplated new regulatory regime.”
• “As much as I would prefer it otherwise, in this financial environment I see no choice but to require that all securitizers retain a meaningful part of the securities they issue,” in order to give the companies an incentive to ensure the assets are properly priced for their risk.

Also speaking before the panel former Treasury Secretary John Snow and Securities and Exchange Commission Chairman Christopher Cox. Snow suggested the nation needs to replace “a fragmented approach to regulation” with “one strong national regulator” to oversee all of the nation’s private financial service firms.

Perhaps the most insightful statement of the day was provided by Representative John Yarmuth (D-Kentucky) who called the witnesses the “three Bill Buckners” (referring of course to Boston Red Sox first baseman who let an easy grounder pass through his legs to lose the 1986 World Series).

Recaps fro Bloomberg, New York Times, and Wall Street Journal.