Steadfast FinancesGreenspan Admits Financial Crisis was Illegal & Fraudulent

Greenspan Admits Financial Crisis was Caused by Fraud & Criminal Actions

Filed in Banking , Consumer Education , Financial Crisis 5 comments

Anyone who bashes Finreg (aka Financial Regulation) after the financial meltdown, the near nightly tightening of the credit market, and after two rounds of quantitative easing obviously knows little to nothing about what went on to cause the real estate bubble, much less, what is still occurring within the legal system from ticked off mortgage backed securities investors (e.g. state pension funds,some of the largest bond mutual funds in the world, etc.) trying to get their money back after being sold fraudulent investments.

Sadly, Alan Greenspan, one of the key architects of loosening financial requirements allowing the formation of the mega (too big to fail) banks, as well as deregulating the commodities and futures markets, has had his “Come to Jesus” moment after the bulk of the (fraud) damage has been done.

There are two fundamental reforms we need: adequate capital and to get far higher enforcement of fraud statutes – existing ones – I’m not even talking about new ones.

Things were being done which were certainly illegal and clearly criminal in certain cases. If you cannot trust your counterparties, it [capital markets] won’t work. And indeed we saw that it didn’t.

– Alan Greenspan

Perhaps I’m too cynical or misanthropic for my own good, but when you strip away basic financial regulations — like excess bank leverage at 40 to 1, destroying underwriting standards, or allowing the complete destruction of personal property rights by foreclosing on a homeowner without a mortgage — you’re practically chopping wood for your own stake burning.

Oops… too late.

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Posted by CJ   @   11 November 2010 5 comments
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Nov 12, 2010
11:39 am
#1 Guzzo :

I think the PBS FRONTLINE investigation, The Warning, presents the best presentation of how Greenspan and his cronies were the architects of the greatest fraud ever perpetrated in the last 50 years.

Yet, he’s still walking around free and ironically telling everyone that we need more regulation in order to prevent fraud.

Gee, how could that possibly make anyone cynical?

Nov 13, 2010
8:50 am
#2 Matt SF :

Oh yeah, I linked to “The Warning” in the post. Lots of people knew it was coming, as if betting 400x U.S. GDP wasn’t a monster tell, but they knew actually enforcing the regulations they had would halt the orgy of buy buy buy.

Better to be fraudulent and having everyone happy than lawful and in the know.

Nov 12, 2010
2:04 pm
#3 Evan :

I go back and forth on this issue (internally at least lol) and I think that if those problems, specifically excess leverage, wouldn’t exist today IF there was less government intervention after the crash.

That being said…there is an easy counterargument of where the hell would we be today without the saving of megabanks?

Nov 13, 2010
9:33 am
#4 Matt SF :

I flip flop on the issue as well. IMO, we’d probably be better without them since most of the Too Big To Fail banks have so much crap on their balance sheets a few of them might be insolvent anyway (Bank of America specifically), and the government could have used the bailout capital given to the TBTFs to smaller banks who actually had a management team who got it right.

(Reward the intelligent, not bailout the morons.)

But I agree, it’s a Catch 22 – save those who shouldn’t be saved vs. risk an overnight depression via a capital black hole. As it exists today, it’s an academic “what if” argument left to the academics and history books.

Nov 21, 2010
12:59 am
#5 Guzzo :

Oh yeah.. I see the link now Matt.

“I go back and forth on this issue (internally at least lol) and I think that if those problems, specifically excess leverage, wouldn’t exist today IF there was less government intervention after the crash.”

These problems would never have occurred if the government (i.e. corrupt leaders and regulators) WOULD HAVE intervened back when Brooksley Born warned them of the impending problem.

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