A Congressional Panel tasked with assessing the causes of the financial crisis that was triggered by a wave of mortgage defaults on mostly sub-prime and non-prime mortgages laid much of the blame on former Federal Reserve Chairman Alan Greenspan for not doing more to warn of the impending crisis.
While there’s little doubt that Greenspan’s overly liberal monetary policy and belief that the financial markets would effectively “police themselves”, laying blame on one man’s shoulders is a bit of a cop-out in my opinion. Several other factors, such as the unregulated credit default swap markets, lack of transperancy between the banks and the rating agencies and the complete failure of regulatory agencies, such as the OTC also weighed heavily into the factors.
The biggest problem with drawing this conclusion is that it’s simply too easy to blame an 86 year old man for the majority of the problems and downplay these other factors which banks and financial firms are aggressively lobbying against changing as we speak. If common sense financial reforms are not enacted soon, the stage will be set for the same mistakes to be repeated, and much sooner than many might imagine.
