For 18 1/2 years as Federal Reserve chairman, he was celebrated for helping drive a robust U.S. economy. Yet in the years after he stepped down in 2006, he was engulfed by accusations that he helped cause the 2008 financial crisis – the worst since the 1930s.
Now, Alan Greenspan has struck back at any notion that he – or anyone – could have known how or when to defuse the threats that triggered the crisis. He argues in a new book, “The Map and the Territory,” that traditional economic forecasting is no match for the irrational risk-taking that can inflate catastrophic price bubbles in assets like homes or tech stocks.
In an interview with the Associated Press, Greenspan reflected on his book, his Fed tenure and the risks that still endanger the financial system. He spoke for an hour at his house in northwest Washington, which he shares with his wife, Andrea Mitchell, the NBC News anchor.
Greenspan acknowledged some errors of judgment as Fed chairman. But he said he saw no reason to downgrade his own assessment of his tenure.
“Our record was fairly good,” he said.
Greenspan offers high praise for Janet Yellen, President Obama’s choice to lead the Fed starting in January.
Reaching back nostalgically to the Republican administration of Gerald Ford, when he led the president’s Council of Economic Advisers, Greenspan remembers a different Washington. He recalls it as a time when political leaders dared to trust their opponents and collaborated to reach common goals.
It didn’t hurt, Greenspan said, that the Democratic speaker of the House, Thomas P. “Tip” O’Neill, would drop by the West Wing of the White House some nights “and have a bourbon with Jerry.”
Here are excerpts of the Greenspan interview, edited for length and clarity: