Mr. Greenspan doesn’t think so. He said that he had little to do with the housing bubble or credit crisis despite criticism that the Fed kept interest rates too low under his watch.
In an interview, Greenspan contended that low interest rates had nothing to do with the run up in housing prices and then collapse of the market. Housing prices, he said, would have gone up anyway whether or not short-term interest rates were low.
What is fairly clear in the case from the data, is that if adjustable rate mortgages weren't available, the purchases (of homes) still would've occurred," he said.
Under Greenspan the Fed cut rates from 6.5 percent in late 2000 to 1.0 percent in mid-2003. Greenspan said the cuts were aimed at increasing liquidity in the financial system and heading off deflation, not boosting the housing market.
“The reason that we were lowering rates wasn’t to spur housing demand,” Greenspan said. “Indeed, it was already being spurred by the fact that long term rates – which is the driver of housing – were low.”
"I have no regrets on any of the Federal Reserve policies that we initiated back then," he said, though he acknowledged that the central bank couldn't always know the full consequences of its policies.
Greenspan summoned up his views on who is to blame for the housing market and credit crunch by writing that the housing bubble, which inflated between 2001 and 2006, had not been unique to the United States.
"The U.S. bubble was close to median world experience and the evidence that monetary policy added to the bubble is statistically very fragile," Greenspan wrote.
Most other leading central banks followed suit, although not to such low levels apart from the Bank of Japan.
The Fed has been accused of keeping rates too low for too long as it sought to help the U.S. economy following the collapse of internet stocks and the blow to confidence from the Sept.11, 2001 attacks.
But Greenspan noted that U.S. economic conditions were still sluggish as late as June 2003, when the Fed cut rates to the 1.0 percent low.
It began raising them a year later. But even then, he said, monetary conditions were not bubble-making. Instead, Greenspan placed blame for the U.S. housing and subprime mortgage crisis at the door of investors.