Greenspan Tells Congress Bad Data Hurt Wall Street

CWmike writes "Former Reserve Bank chairman Alan Greenspan has long praised technology as a tool to limit risks in financial markets. In 2005, he said better risk scoring by high-performance computing made it possible for lenders to extend credit to subprime borrowers. But today Greenspan told Congress that the data fed into financial systems was often a case of garbage in, garbage out. Christopher Cox, chairman of the Securities and Exchange Commission, told the committee that bad code led the credit rating agencies to give AAA ratings to mortgage-backed securities that didn't deserve them. Explaining in his testimony what failed, Cox noted a 2004 decision to rely on the computer models for assessing risks — a decision that essentially outsourced regulatory duties to Wall Street firms themselves."

Comments

Re:Greenspan's a muppet.

[ericferris]

I second that. "I was for computing before I was against it". Flip-flopping is the last thing you want from a man that has his position.

Greespan spent years at the Fed happily spouting dictates that affected the world's economy. Then he wrote a book saying he disagrees with everything he did and disapproves Bush -- against which he never uttered a peep while he was at the helm.

This is the kind of guy who would open a restaurant specialized in rare bird meat and then become a member of PETA. Have some decency, man.