Fed maestro hearing sour notes
Praise for former Chairman Alan Greenspan has been muted by critics who blame him for current economic troubles.
NEW YORK — Alan Greenspan retired in January 2006 as one of history's most lauded Federal Reserve Board chairmen, the subject of accolades that stopped just short of deification.
But just as markets have a way of overshooting both on the way up and on the way down, the needle on Greenspan's Fed tenure has swung from adulation to denunciation in a matter of months.
With the economy now sputtering, Greenspan has increasingly been tagged as "Mr. Bubble" -- the ideologue whose loose-money policies and lax regulation are blamed for the continuing real estate collapse, the near-meltdown of the mortgage industry and the toppling of some Wall Street giants.
The 82-year-old economist, once dubbed "the maestro" for guiding the economy during its longest postwar boom, is responding to the backlash with a vigorous defense. In newspaper and television interviews and in Internet forums, Greenspan has accused critics of applying unfair hindsight to problems that no one could have foreseen.
"I have no regrets on any of the Federal Reserve policies that we initiated back then," Greenspan said Tuesday in an interview on CNBC.
Although the consequences were sometimes unexpected, he said, the Fed reached its decisions rationally.
"In retrospect, do I think it would've been nice to have a higher record of forecasting accuracy? Of course. Do I think that it's possible? No."
In this and other recent interviews, Greenspan has clung to his contention that too-strict regulation is a bigger threat to economic well-being than are the periodic blowups to which free markets are prone.
Greenspan, who declined to comment for this article, told the Wall Street Journal that he was "being blamed for things I didn't do."
Rep. Barney Frank (D-Mass.) said one of the things Greenspan didn't do -- to his discredit -- was exercise the Fed's regulatory power over the mortgage industry when there was still a chance of averting the sub-prime loan mess.
Frank, chairman of the House Financial Services Committee, said in a recent interview that he found Greenspan's thinking oddly "bifurcated."
On the one hand, Greenspan was seen as intellectually flexible enough to cast off the traditional Fed notion that whenever the unemployment rate fell below 5%, interest rates had to be raised to head off inflation.
