In May 2005 speech, Greenspan said that ``private regulation generally has proved far better at constraining excessive risk-taking than has government regulation.''
Greenspan opposed increasing financial supervision as Fed chairman from August 1987 to January 2006. Policy makers are now struggling to contain a financial crisis marked by record foreclosures, falling asset prices and almost $660 billion in writedowns and losses tied to U.S. subprime mortgages.
Today, the former chairman asked: ``What went wrong with global economic policies that had worked so effectively for nearly four decades?''
Greenspan reiterated his ``shocked disbelief'' that financial companies failed to execute sufficient ``surveillance'' on their trading counterparties to prevent surging losses. The ``breakdown'' was clearest in the market where securities firms packaged home mortgages into debt sold on to other investors, he said.
Who would have guessed this would happen. I'm a big fan of admitting when you're wrong. Alan did. Good.