I heard today on NPR that Dr. Greenspan was not against the sub prime mortgages that became a means of entrance for many into the real estate market. He said it was the ARM backed securities that were insured to have higher ratings than they should have which were the cause of the Wall Street breakdown.
Of course, having worked long and hard for the repeal of the Glass Stiegal act would place Dr. Greenspan somewhere on the high road which lead to the dangerous financial deregulation that allowed banks and insurance companies to form one stop shop financial institutions in the first place. In his book " A Turbulent Age", Dr. Greenspan states that he did this because computer models indicated it would make the present financial institutions resistant to economic down turns. They would then be in line with the robust survivors of the great depression.
The clients repaying these bridge loans defaulted, this collapsed the ARM backed cash pipes (securities) which wiped out AIG who insured the securities, which caused exposed institutions to default on loans from international banks who then had no operating capital. Baling out the domestic institutions merely allowed them to pay back foreign banks. More money was then required to shore up the surviving institutions- a bail out of main street was not part of the Wall Street rescue package.
Therefore, domestic financial institutions were more interested in meeting their quarterly earnings forecasts than underwriting products with enduring values. So, they moved financial instruments quicker than anybody else. Dr. Greenspan and his too big to fail financial Zombie group are more responsible for the Wall Street breakdown than any body on main street.