Greenspan Refused To Regulate Sub-Prime Lenders While Fed Chief

June 9, 2007 (LPAC)--Alan "Bubbles" Greenspan blocked regulation of subprime lenders during his tenure as Federal Reserve chairman, claims Edward Gramlich of the Urban Institute, in a book he has just written: Subprime Mortgages: America's Latest Boom and Bust, published by the Urban Institute. Gramlich was a Fed governor from 1997-2005.

According to the June 9 Wall Street Journal , Gramlich said he had pressed for the Fed to show leadership in regulating predatory lending, but Greenspan was against the idea, which clashed with his free-trade ideology.

Now, with subprime mortgages defaulting in record amounts, the Fed is looking again to find ways to increase its regulatory powers over subprime mortgages. In 2005, some 52% of subprimes came from companies not under federal supervision--mortgage brokers and "stand-alone" finance companies.