Wednesday, May 21, 2008

Greenspan Helped Pimco Make Billions, Gross Says

The guy should be consulting from inside a federal prison.*

From Bloomberg:

Alan Greenspan, the former Federal Reserve chairman, has helped Pacific Investment Management Co. make ``billions of dollars'' in his role as a consultant, said Bill Gross, the bond manager's co-chief investment officer.

During a 30-minute discussion on banks several months before the global credit crisis, Greenspan's ``brilliance in terms of forecasting the potential for exactly what happened was a big money saver for us,'' Gross, who runs the world's largest bond fund, said yesterday at a conference organized by the Asia Society in Los Angeles. ``He's made and saved billions of dollars for Pimco already.''...

...Laying Blame

House Financial Services Committee Chairman Barney Frank and former Fed Vice Chairman Alan Blinder have faulted Greenspan for lax oversight of mortgage lenders. Critics including Carnegie Mellon University professor Allan Meltzer blame the former Fed chairman for keeping interest rates too low for too long, fueling the surge in house prices.

``He bears some responsibility for the subprime problem,'' said Yasutoshi Nagai, chief economist in Tokyo at Daiwa Securities SMBC Co., a unit of Japan's second-largest brokerage. ``If he had been faster to hike rates, it wouldn't be so severe. The Fed is also responsible for banks, who lent to people who should not have been buying.''>>>MORE

*See (in reverse chron. order) "Alan Greenspan: Competent Criminal or Criminally Incompetant?", "Allen Greenspan WTF" and "Allen Greenspan, Worth Civils and the Wall Street Energy Roundup"