This is a dead thread, but personally I blame Alan Greenspan more than any other single person for the financial problems we are facing now. During his long tenure as Fed Chairman, his huge ego allowed him to
abrogate the duties of his position. His job was to control interest rate decisions and act with discipline and rigor. This was something Paul Volker did very well. I’ve heard it described that Greenspan’s job was to take away the punchbowl when the party got too rowdy. Instead he kept filling the punchbowl with easy credit. He also spoke out AGAINST the regulation of derivatives. Derivatives were and still are “bets” on interest rates, mortgages, etc. They were meant to be a tool of risk management.
They became a Frankenstein monster money maker for the investment bankers that bundled crappy subprime derivatives, then sliced and diced them and sold them all over the world as prudent financial products. Well, that worked out poorly, bringing down Lehman and Bear Sterns and costing the taxpayers (who are still forking over money for this fiasco).
The Chinese Walls between Wall Street and Main Street crumbled under his watch. Remember Warren Buffet’s words that “derivatives are weapons of mass financial destruction”? Someone irresponsible and ego driven should never have been at the helm so long. It is one of the fundamental reasons that Ron Paul (whom I do NOT like) is taking out after the Fed which has been shrouded in secrecy since its inception in 1913.