Greenspan's gripes

I'd chalk it up to the ranting of a crotchety old man, but the guy's as sharp as ever. In an interview this week with the Wall Street Journal, Alan Greenspan takes issue with the government's response to Fannie Mae and Freddie Mac. After unease with some of Greenspan's comments lately, I'll agree the government's response was less than stellar, but it is the government for God's sake; I was never expecting much. Remember, it was Congress (Chris Dodd and Barney Frank in particular) who were encouraging Freddie and Fannie to make more loans available (i.e. take on more risk) as the meltdown was happening. Not exactly a tightening of the belt.

"They should have wiped out the shareholders, nationalized the institutions with legislation that they are to be reconstituted — with necessary taxpayer support to make them financially viable — as five or 10 individual privately held units, and auctioned off," Greenspan said.

Any time I see the word "nationalized" I get queasy, but it's tough to truly nationalize something that the government already has such a big hand in anyway, and what he suggests is actually a path to privatization. I certainly don't agree with everything he says, and his luster has unquestionably diminished of late, but as I said, sharp as ever. …