Greenspan: I Was ‘Mystified’ By The Subprime Mortgage Market

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"Greenspan: I Was ‘Mystified’ By The Subprime Mortgage Market"

alangreenspan.jpgIn October, as the true extent of the financial crisis was being realized everywhere, former Federal Reserve Chair Alan Greenspan admitted that the crisis was “broader than anything I could have imagined.” And the Greenspan confession tour is evidently not over.

In a forthcoming CNBC documentary, Greenspan reportedly admits that he was “mystified” by the subprime mortgage market. As DealBook reported:

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.

In 2001, subprime mortgages accounted for 5 percent of mortgage originations, totaling $173.3 billion dollars. By 2005, that had grown to 20 percent, totaling $600 billion.

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