Greenspan blames investment banks for credit crisis

Former Federal Reserve chairman Alan Greenspan has defended his economic policy record at a US congressional hearing into the financial crisis.

Greenspan denied his policy of keeping interest rates low had helped cause the crisis, blaming the repackaging of sub-prime mortgages by investment banks for sparking the credit crunch. "It was the global proliferation of securitised US sub-prime mortgages that was the immediate trigger of the current crisis," he says. "By the first quarter of 2007, virtually all sub-prime originations were being securitised, and sub-prime mortgage securities outstanding totalled more than $900bn." Greenspan also argued interest rates set by the central bank had little impact on the price of sub-pr...