Jake Tapper: Alan Greenspan defends legacy from harsh criticism:
[David] Dayen suggests Greenspan shares the blame with JPMorgan Chase for duping investors into purchasing mortgage-backed securities that were stuffed with garbage loans because his “allergy to regulation and unshakeable belief in the virtues of the free market led him to ignore the bubble and its risks, infusing investors and consumers with confidence that the run-up in home prices was perfectly normal.”
"This is not an American bubble. The housing bubble looks the same whether you're going to Canada, Australia or any of 20 other countries. We're somewhere in the middle," said Greenspan. "The critical question that we all missed is when it would break, and one of the things I demonstrate basically in the book is you cannot determine that," said Greenspan.
But: Alan Greenspan: The Map and the Territory:
Fannie Mae and Freddie Mac... to meet the expanded “affordable housing goal” requirements... had few alternatives but to invest, wholesale, in subprime securities.... To meet this demand, securitizers... unwisely prodded subprime mortgage originators to increase their scale of originations... entice new, but risky, buyers.... The mortgage arrears of subprime ARMs almost immediately began to rise, and many borrowers failed to make even the first mortgage payment.... By the first quarter of 2007, owing to pressure on the securitizers meet the demand for subprime securities from the GSEs, virtually all subprime mortgage originations (predominantly ARMs) were being securitized...
The first point, of course, is that subprime mortgage-based securities in the hands of Fannie Mae and Freddie Mac were not a source of systemic risk, and not a source of the financial crisis and Lesser Depression
And the second point is that Alan Greenspan cannot, on the one hand, say "it's all the fault of the U.S. guviment!" and on the other hand say "the housing bubble looks the same whether you're going to Canada, Australia or any of 20 other countries". That just does not compute.