Greenspan concedes that the Fed failed to gauge the bubble
Is Alan Greenspan, famous for his libertarian leanings and hands-off approach to Wall Street, having some second thoughts? After more than six decades as a skeptic of big government, the former Federal Reserve chairman, now 84, is gingerly suggesting that perhaps regulators should help rein in giant financial institutions by requiring them to hold more capital. Mr. Greenspan, once celebrated as the “maestro” of economic policy, has seen his reputation dim after failing to avert the credit bubble that nearly brought down the financial system. Now, in a 48-page paper that is by turns analytical and apologetic, he is calling for a degree of greater banking regulation in several areas. The report, which he is to present Friday to the Brookings Institution, is by no means a mea culpa. But in his customarily sober language, Mr. Greenspan, who has long argued that the market is often a more effective regulator than the government, has now adopted a more expansive view of the proper role of the state.