Greenspan: It's Not My Fault

It's not my fault.

That was the message Federal Reserve Chair Alan Greenspan brought to the Financial Crisis Inquiry Commission this morning. He didn't budge from that script even as commission chair Phil Angelides, former Treasurer of California, pushed back with evidence that Greenspan – under oath – wasn't telling the whole truth.

As Greenspan tells it, risky subprime lending boomed in the 2000s as money flooded in from investors, biggest among them Fannie Mae and Freddie Mac. Fannie and Freddie operated under mandates from Congress and the U.S. Department of Housing and Urban Development to back mortgages made to low- and moderate-income borrowers, and fulfilled them largely by buying subprime securities issued by Wall Street. Then investors from around the world piled on.

So where was the Fed while this was going on? Did it try to slow down subprime lending before the bubble burst?

Greenspan told two different versions of this story, both professing the Fed's innocence. Unfortunately, neither one gets Greenspan off the hook for the Fed's failures to act.