Hoyer: Greenspan Acknowledges Role of Regulatory Neglect

For Immediate Release:

October 24, 2008

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WASHINGTON, DC – House Majority Leader Steny H. Hoyer (MD) released the following statement regarding Former Federal Reserve Chairman Alan Greenspan’s assertion that Republicans’ push toward financial deregulation went too far.  In surprising testimony before Congress yesterday, Greenspan conceded that the hands-off approach to the markets he once favored helped spark the foreclosure and credit crises. “I made a mistake in presuming that the self-interests of organizations…were such that they were best capable of protecting their own shareholders and their equity in firms. I have found a flaw,” Greenspan testified. When asked whether economic events contradicted his hands-off ideology, Greenspan responded, “Absolutely, precisely.”

“I appreciate Chairman Greenspan’s candor, and I hope to see similar candor from conservatives in the days to come. It is clear that knee-jerk Republican deregulation has failed. It is equally clear that Congress must restore sensible, effective oversight to our financial markets to protect investors and taxpayers. Democrats have already begun on that path by passing comprehensive subprime lending reform and a housing rescue bill, and holding numerous hearings on all aspects of the current crisis.  We will continue this effort in the next Congress with important regulatory reform.

“But we must take more immediate action to confront a recession that has already cost hundreds of thousands of jobs. An economic recovery package should be at the top of Congress’s agenda. Such legislation would create jobs and provide critical Medicaid funding for states hit hardest by the economic crisis. It should also extend unemployment insurance to hundreds of thousands of Americans temporarily out of work, helping those in need while stimulating our economy. The current Federal Reserve Chairman, Ben Bernanke, has already endorsed an economic recovery package. We hope that Congressional Republicans and President Bush will join us, as well, to start creating jobs and rebuilding our economy as soon as possible.”

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