For anyone who didn’t think former Federal Reserve Chairman Alan Greenspan was arrogant, recently released minutes of a Fed meeting in 2004 prove it, says financial author Roger Lowenstein.
And that arrogance helped bring about the financial crisis, says Lowenstein, author of a new book “The End of Wall Street.”
At the Fed meeting six years ago, Greenspan argued against disclosing too much of the Fed’s deliberations to the public, because the Fed might “lose control of a process that only we fully understand.”
“It was Greenspan himself who didn’t understand — much less ‘fully understand’ — that the Fed’s lax mortgage regulation and easy monetary policies were setting America up for a disastrous fall,” he wrote on Bloomberg.com.
At the 2004 meeting, Atlanta Fed President Jack Guynn said, “(There is) growing concern about potential overbuilding and worrisome speculation in the real estate markets, especially in Florida.”
Guynn noted that real estate buyers freely admitted, “They have no intention of occupying the units or building on the land but rather are counting on flipping.”
We would have been a lot better off if that view had been made public, Lowenstein explains.
In another sign of trouble at the Fed, its own inspector general recently said examiners at the Chicago Fed failed to prevent risky real estate lending that caused losses at banks in Indiana and Michigan, Bloomberg reports.
The banks later failed.
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