[chollida1]

Really?

I don't think anyone really holds him responsible for the dotnet crash of 2000 as that was a market issue and irrational exuberance issue and not a monetary one.

And 2008 was similar. The Fed doesn't control or have any responsibility for lower lender standards or ARM mortgages.

Congress was responsible for the GSE's that bought any mortgages and wrote insurance on those mortgages, so you can't blame the FED for that.

Wallstreet are their regulators were responsible for the securitization of mortgages that went bad in 2008, not the FED.

At worst you can say they had the wrong monetary policy but that's an opinion and not something that can be said as a fact.

Can you flesh out how you feel Greenspan is responsible for 2008?

[hylaride]

He actively campaigned against any regulation of derivatives. There is an infamous lunch that he had with Brooksley Born (who was head of the Commodity Futures Trading Commission) in the late 1990s where she attempted to regulate them. The details of the meeting are fuzzy and none of the participants will go on the record to what was said, but the gist is that he said he would fight her tooth and nail. After massive lobbying from Greenspan, as well as Lawrence Summers, congress passed legislation prohibiting her agency from regulating derivatives. She resigned shortly after.

[HeyBigE]

You don't think Greenspan had a major hand in the dot com crash? "In late 1999, the Federal Reserve under Greenspan flooded the financial system with unprecedented liquidity to ward off potential deflationary impacts and cash-hoarding caused by the Y2K bug panic. The Fed expanded the money supply at an annualized rate of 22% in the fourth quarter of 1999."

As for the Great Recession, taking the Fed Funds rate from 6.5% to 1.0% and holding it there for a year was the catalyst for driving everyone into the mortgage market looking for returns. And then did not regulate subprime lending or the shadow banking market:

"As the housing market boomed, subprime mortgage originations skyrocketed from 8.2% of all mortgages in 2003 to 23.5% in 2006. The Fed possessed the authority under the Home Ownership and Equity Protection Act (HOEPA) to crack down on predatory lending and loose underwriting standards but chose not to act aggressively."

"The Fed failed to properly monitor off-balance-sheet vehicles, investment bank leverage, and complex derivatives like mortgage-backed securities (MBS) and collateralized debt obligations (CDOs). Because these instruments developed outside traditional commercial banking oversight, a highly leveraged 'shadow banking' system grew completely unchecked under the Fed's watch."

So yeah, the Fed has its fingerprints all over the scene of the crime. Lots of blame to go around though..

[sporadicism]

> Can you flesh out how you feel Greenspan is responsible for 2008?

Greenspan felt Greenspan was responsible for 2008.

https://www.nytimes.com/2008/10/24/business/economy/24panel....

[jcranmer]

The chief criticism lies in the "Greenspan put"--the idea that the Fed would just never let asset prices fall, a policy which both bears his name and is noteworthy enough to have a detailed Wikipedia article on it.

[skywhopper]

Greenspan actively advocated for more use of ARM mortgages for personal home buying, while in a position to have the best access to data and analysis on the growing risk of those mortgages. Whereas mere common sense and a knowledge of economic history would argue against widespread use of ARMs for individual home purchases. When the fed chair says “we need more ARMs” to a market using ARMs to prop up a growing bubble, that is as much or more responsibility as any other single person.

[CalRobert]

There was a dot net crash too??