Greenspan: A "flaw" you say?

Greenspan is shocked to find "flaw" in his "conceptual framework" for interpreting realty (AKA, his neo-liberal ideology).

I suppose this means that's it. We win! One couldn't of a more damning indictment of the ideology underpinning the capitalist system.

Here are exerpts from his testimony before the HEARING OF THE HOUSE COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM;SUBJECT: THE FINANCIAL CRISIS AND THE ROLE OF FEDERAL REGULATORS, RAYBURN HOUSE OFFICE BUILDING, WASHINGTON, D.C., October 23, 2008 Thursday. (From LexisNexis)

WAXMAN: [Y]ou said in your statement that you delivered, the whole intellectual edifice of modern risk management collapsed. You also said, "Those of us who have looked to the self-interest of lending institutions to protect shareholders' equity, myself especially, are in a state of shock and disbelief," end quote.

Now, that sounds to me like you're saying that those who trusted the market to regulate itself, yourself included, made a serious mistake... Well, where do you think you made a mistake, then?

MR. GREENSPAN: I made a mistake in presuming that the self- interest of organizations, specifically banks and others, were such (as that ?) they were best capable of protecting their own shareholders and their equity in the firms. And it's been my experience, having worked both as a regulator for 18 years and similar quantities in the private sector, especially 10 years at a major international bank, that the loan officers of those institutions knew far more about the risks involved in the people to whom they lent money than I saw even our best regulators at the Fed capable of doing.

So the problem here is, something which looked to be a very solid edifice, and indeed a critical pillar to market competition and free markets, did break down. And I think that, as I said, shocked me.

I still do not fully understand why it happened. And obviously, to the extent that I figure out where it happened and why, I will change my views. And if the facts change, I will change.

WAXMAN: Do you feel that your ideology pushed you to make decisions that you wish you had not made?

MR. GREENSPAN: Well, remember that what an ideology is, is a conceptual framework with the way people deal with reality. Everyone has one. You have to -- to exist, you need an ideology.
The question is whether it is accurate or not.

And what I'm saying to you is, yes, I've found a flaw. I don't know how significant or permanent it is. But I've been very distressed by that fact.