It marks the end of an era. Alan Greenspan, the maestro, defender of the market fundamentalist faith, champion of deregulation, celebrator of exotic banking inventions, admitted Thursday in a hearing before Rep. Henry Waxman’s House Committee and Oversight and Government Reform that he got it wrong. Wearing rough sack cloth and sooty with ash, Greenspan was blanched. [All right. Spot made that last sentence up.]
“Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief,” he said.
As to the fantasy that banks could regulate themselves, that markets self-correct, that modern risk management enforced prudence: “The whole intellectual edifice, however, collapsed in the summer of last year.”
A Republican committee member tossed Greenspan a life ring called the "Community Reinvestment Act," but Uncle Alan was too weary and shocked to take a hold of it. He'd lost the will to live.