Greenspan Testifies in Financial Crisis Hearing, ‘Shocked’ at Credit Breakdown
Former Federal Reserve Chairman Alan Greenspan told Congress on Thursday he is "shocked" at the breakdown in U.S. credit markets and that he sees more layoffs and a jump in unemployment ahead.
Greenspan said the current global financial crisis is a "once in a century credit tsunami" that policymakers did not anticipate.
Greenspan is the lead-off witness at a House hearing lawmakers called to question past key financial players about what they felt caused the most grave financial crisis since the 1930s.
The witnesses are also expected to be asked how they thought the government would deliver the nation from the economic turmoil.
Greenspan was the chairman of the Federal Reserve for 18 1/2 years. In his testimony prepared for the House Government Oversight and Reform Committee, he voiced shock over the present turn of events and called conditions deplorable.
He said that he and others who believed lending institutions would do a good job of protecting their shareholders are in a "state of shocked disbelief." And Greenspan also blamed the problems on heavy demand for securities backed by subprime mortgages by investors who did not worry that the boom in home prices might come to a crashing halt.
Published on October 23, 2008
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