Arnold Kling

Greenspan the Deregulator

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John Cassidy writes,


Anatole Kaletsky, an economic commentator for the Times of London, made a pertinent point: it was Brown himself who had given an honorary knighthood to Alan Greenspan, the great deregulator.

I have a question. If you do a search for the words "Alan Greenspan" and "deregulation" appearing in the same article, do you get many hits prior to 2008? Note that Greenspan left the Fed in 2006. I want to know what his great deregulatory accomplishments were.

I understand that he failed to regulate subprime mortgages, but that was during an era when "low-income homebuyers" and "under-served homebuyers" were sacred cows. The politicians wanted to see money flow to risky borrowers. That is difficult to do without also making risky loans.

I understand also that Brooksley Born wanted derivatives to be part of her regulator turf. To some people, that makes her a would-be hero. It sounds to me more like a typical bureaucratic empire-builder. To me, the key issue is not derivatives per se. Rather it is the regulatory arbitrage of capital requirements facilitated in part by derivatives, which Brooksley Born would not have stopped even had she had obtained her empire.

Anyway, I would like to see a list of all of Greenspan's deregulatory accomplishments prior to 2008, when he becomes the Great Deregulator as an emeritus.


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COMMENTS (2 to date)
Eric writes:

Amen! Brook Born is lionized for her wish to put derivatives under her purview, but never did she specify anything that would have made a difference. One merely is supposed to assume that if it was under her control, she would have gotten rid of NINJA loans, or imposed leverage limits on investment banks. With hindsight, these would have been good ideas, but I see no reason to think she had those in mind.

Ravi writes:

This piece (from 2006)

http://www.washingtonpost.com/wp-dyn/content/article/2006/01/19/AR2006011903180.html

(mostly) praises Greenspan's extensive efforts to promote deregulation. With the benefit of hindsight, it reads quite differently, of course.

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