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Fed Didn't Cause Housing Bubble: Greenspan

Alan Greenspan, former Federal Reserve Chair, has defended his policies saying Fed had played no role in the occurrence of housing bubble. He was expressing his views on the current real estate market situation in a leading journal of the nation.



According to Greenspan, the real cause of the housing bubble was the availability of housing finance at low interest rates, which had not been set by the Federal Reserve. Instead, it was the growth in China and other emerging economies across the globe that had led to a decline in long term interest rates in the US.



He also advocated the installation of a regulatory regime that would ensure a responsible risk management on behalf of financial institutions while encouraging them to continue taking risks on their own.


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