Doth he protest too much?

Former Federal Reserve Chairman Alan Greenspan is back in the news—this time he is putting a full-court press on his reputation, which has come under scrutiny of late. Interviews with the Wall Street Journal, CNBC and anyone else who would print his great defense have highlighted his basic premise: “I am now being blamed for things that I didn't do.”

To give Greenspan credit, he also noted “I was praised for things I didn't do," but of course he never bothered to say that when people called him “Maestro” or hailed him as “the greatest central banker who ever lived.”
Pity poor Alan—he has gone from Maestro to goat as the low rates during his terms and his Ayn Rand hands-off regulatory approach are now seen as the culprits of today’s financial mess. Like markets that can turn on a dime, so too can reputations. Some of us have been harsh in our judgment of the retired Fed chairman. At the end of his 18-year tenure in December 2005, I wrote the following:

Greenspan’s legacy is “being too generous when it came to asset bubbles. The Fed’s responses to a number of crises in the nineties helped to foster the stock market bubble…In response to the bear market, 9-11 and the ensuing recession, Greenspan once again relied on easy money to prop up the economy… The 13 interest rate cuts, all the way down to 1%, helped fuel a housing boom.”

But don’t just take my word for it--if you want to read an amazing analysis of the Greenspan legacy, check out the recently published “Greenspan's Bubbles: The Age of Ignorance at the Federal Reserve” by William Fleckenstein and Fred Sheehan. (Full disclosure: Bill is a family friend.) Using transcripts of Greenspan's FOMC meetings as well as testimony before Congress, the authors present a scathing indictment of Greenspan’s Fed and show how the Maestro may have caused or exacerbated many of the economic calamities that occurred during his tenure. “Greenspan’s Bubbles” also shines a light on the political side of the Maestro.

And what could be more political than Greenspan’s elaborate reputational defense? According to the Wall Street Journal, “Mr. Greenspan says he doesn't regret a single decision.” Is he kidding? Who among us truly does not regret a single business decision? I might have changed my view of Greenspan if he had engaged in an honest discussion of what he did well and not so well over the course of eighteen years. Instead I am left wondering whether he doth protest too much.