Former Federal Reserve Chairman Alan Greenspan said there will be ``some rethinking'' of collateralized debt obligations after demand for them helped fuel the collapse of the U.S. subprime mortgage market. ``People always say it's the subprime market that created this crisis. It's the subprime asset-backed market'' which did, Greenspan told investors in a discussion at Bloomberg LP in London. ``As a consequence of that there's going to be some rethinking about collateralized debt obligations.'' Central banks have raised concern about the way markets assess the risk of CDOs, which are bonds based on underlying debt and other assets. Citigroup Inc., the biggest U.S. bank, said yesterday that credit and trading losses on loans and mortgage-backed securities led to a 60 percent drop in its third-quarter profit. ``The Wall Street firms were under real pressure to supply asset-backed securities and the Wall Street firms were pressing the lenders to give them more raw material,'' Greenspan said today. ``Credit standards just went straight down, and applications for subprime mortgages soared. The consequences of that are evident.'' http://www.bloomberg.com/apps/news?pid=20601087&sid=an2OvZA9sNzk&refer=home Good to know Alan ! Thank you for the insight after quitting your job !...
Can only partially blame the man. I think Bush is more to blame for the political pressure placed on the fed to accomodate a strong economic environment AT ANY COSTS, which the bill is now coming in.