Greenspan says didn't see subprime storm brewing
Updated: 2007-09-14 11:01
"I think he is doing an excellent job," Greenspan said of Bernanke in a television interview scheduled to air on Sunday.
Greenspan was asked if he would lower interest rates as dramatically and quickly now as he did just ahead of, during and in the wake of the 2001 recession, according to the interview released on Thursday.
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"You can't do that anymore. ... I'm not sure I would have done anything different (if chairman today)," he added.
The comments from Greenspan, who was tested early in his tenure by the October 1987 stock market crash, come as Bernanke's skills are challenged by rising defaults in the US subprime mortgage market, which caters to risky borrowers, and a related global credit squeeze.
Bernanke's Fed has come under fire from some quarters for not acknowledging quickly enough how deeply the current crisis could harm the economy or responding aggressively enough to keep the US economy on track. Some analysts have speculated that Greenspan would have acted more swiftly.
Bernanke and his colleagues meet on Tuesday. They are widely expected to lower benchmark overnight interest rates, which the Fed has held at 5.25 percent since June 2006, by at least a quarter-percentage point.
Bernanke had justified holding rates at that level despite some clamoring in markets for lower borrowing costs, on the grounds that inflation has remained troublingly high and needed to recede first. Only in recent weeks, as credit stress mounted in financial markets and it became clear a housing recovery was a long ways off, have Fed officials suggested that worries about growth have supplanted long-standing concerns on inflation.
Storm brewingGreenspan, who stepped down from the helm of the US central bank in January 2006, said that as Fed chief he knew about questionable lending practices that were leaving subprime borrowers with adjustable rate loans vulnerable to harm from rising interest rates, but did not recognize those loans would trigger broader problems until fairly recently.
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