Alan Greenspan acknowledged Wednesday that mistakes were made during his long tenure as chairman of the Federal Reserve, but he argued that the low interest rate policy he championed at the central bank didn't inflate the housing bubble.
In testimony before the Financial Crisis Inquiry Commission, Greenspan said the recent financial meltdown was possibly "the most severe in history." He admitted that regulators failed to grasp the severity of the crisis, but he maintained that his policies and predictions were correct most of the time.
"When you've been in government for 21 years, as I have been, the issue of retrospect and what you should have done is a really futile activity," Greenspan said. "I was right 70% of the time. But I was wrong 30% of the time, and there were an awful lot of mistakes in 21 years," he added.
Greenspan, who was chairman from 1987 to 2006, has been criticized for not increasing the Fed's benchmark interest rate in time to prevent the housing market from becoming overheated. The housing bubble eventually burst in 2008, giving rise to a wave of foreclosures, which roiled the financial markets and plunged the economy into a deep recession.