Mr. Andrea Mitchell shares his thoughts on the subprime market:
Alan Greenspan, the former chairman of the Federal Reserve, told CNBC in a documentary to be shown Thursday night that he did not fully understand the scope of the subprime mortgage market until well into 2005 and could not make sense of the complex derivative products created out of mortgages.
“So everybody in retrospect now knows that that boom was developing under the markets for quite a period of time, but nobody knew it,” Mr. Greenspan told CNBC’s David Faber. “In 2004, there was just no credible information on that. It wasn’t until we got well into 2005 that the first inklings that that was developing was emerging,” he said.***
Mr. Greenspan also lays the blame on the ratings agencies and the people that trusted their judgment for the proliferation of the mortgage derivatives that were a major part of the current financial crisis.
“What we have created in this world is an aura around the credit rating agencies about certification from them is the Good Housekeeping Seal of Approval, ” Mr. Greenspan said. “I will tell you the record of a lot of the forecasters of ratings have not been distinguished. They never were.”
I still can’t figure out how or why the ratings agencies seem to be getting a free ride in this debacle. Not that anything really bad has happened to the bankers or the rest of the Wall Street wizards. Berine Madoff is relaxing in his luxury apartment as we speak. Sure, congress pulled some of them in and threw some tomatoes at them and gave them a couple raspberries, but at the same time Geithner, is announcing he is working on a plan to throw billions and trillions at them. I’ll face a couple silly questions from Maxine Waters for a share of the $350 billion. Where do I sign up?