Financial institutions will be able to privatize profits and share losses

Fascinating bites than that which took place yesterday on Capitol Hill in Washington. On the one hand, one old man of eighty-four years, the legendary big glasses and semi-contrit smile, the other ten members of the bipartisan commission on the financial crisis, named by Barack Obama in May 2009. Without surprise, the former President of the Fed, Alan Greenspan, rejected any liability direct in the spread of the crisis of the "sub-prime" (the sub-prime), while acknowledging having "certainly made mistakes." But he also warned the legislature against the emergence of new financial crises to binding rules on bank capital and collateral requirement would be quickly adopted. Fault of being able to prevent the "crisis of the"subprime"," Alan Greenspan intends to contribute to the prevention of future crises at the time where many experts questioned the future of the American regulation reform.

"This is not possible to predict in advance the degree of success of each financial innovation." "Only a level of capitalization and of collateral right can resolve this dilemma", concluded Alan Greenspan at the end of his testimony before the Financial Crisis Inquiry Commission. "If the capital is adequate, by definition, there will be no default and the contagion risk will be dammed ...." Financial institutions will be able to privatize profits and share losses.

With respect to the past, the former President of the Fed (from 1987 to 2006) largely rejected responsibility for the balloon of the "sub-prime" on the two leading specialists in parastatal of the refinancing of credit Fannie Mae and Freddie Mac, which contributed greatly to the spread "The enormous amount of acquisition of credit risk in 2003 and 2004 by the GSE "government sponsored enterprises", Editor's note was not disclosed before September 2009 when Fannie Mae has reclassified a large part of its portfolio in the category of risk products", thus argued Alan Greenspan. He also severely criticized the rating agencies were a "major factor in the cause of the problems."

Refusal of the scapegoat

To the questions posed by members of the Commission on the many alarm - including an FBI report of 2004 on "epidemic of real estate fraud"-, Alan Greenspan recalled having warned the Congress, on several occasions, on the unsustainable pace of the "building boom" from 1997, showing also the Committee monetary policy of the Central Bank expressed concern in 2002. But he believes do not have regulatory powers to stem the drift of the situation. Best, according to him, it is Congress that prompted the Central Bank to encourage the allocation of housing credit to disadvantaged households.

"If we said at the time that we were in the formation of a bubble, the Congress would have said that we understand nothing!", it is forbidden, Alan Greenspan by refusing to play the scapegoat. A year after his first sketch of "mea culpa" in October 2008 on the monitoring of the banking sector, he dismissed yesterday any direct responsibility in the deepening of the housing bubble in the heart of the financial crisis. "The price of real estate bubble was caused by low interest rates;" "but these are long-term rates which have galvanized price, not the rate on the day the day of the central banks, as seems to become the common opinion", qualified former boss of the Fed, by explaining that it had declined further interest rates in 2003 to deal with deflationary pressure remaining at the time.

Oracle stripped

Significantly fewer repentant than in 2008, the "oracle" fallen fed - sitting now since January 2008 to the Supervisory Board of the Fund spéculatiof Paulson & Co of John Paulson, the man who won $ of profit 15 billion bet on the crisis in the sub-prime ("Les Echos" from March 30, 2010)-a estimated yesterday "have correct 70 of the time and wrong 30". A proportion leaving visibly reflected the members of the commission of inquiry. It will be today at the Tower of the former Treasury Secretary and Adviser to Citigroup, Robert Rubin, who had campaigned in 1999 for the repeal of the Glass - Steagall Act on the separation of banking activities, to pass on the grill, in the company of the former CEO of Citigroup Charles Prince.