Greenspan: Didn’t Cost the Fed or Market Cash

Chairman Greenspan's term has been one of the most successful in history, with strong growth, low unemployment, and low and stable inflation.

… His insistence on an eclectic approach to monetary policy proved very successful,….

… in the case of LTCM [hedge fund collapse], [the Fed] engineered a quick takeover to unwind the open positions, the LTCM “bailout” never put any Fed money at risk and didn't cost the market any cash, but it could have precipitated a major crisis if the positions had been liquidated more quickly.

… Only two months after he took the helm, the drop in the dollar and a Fed rate hike helped trigger the 1987 stock market collapse, the biggest one-day drop in history. His support for tax cuts helped create the deficits he opposed later in his term, although he did back smaller and more temporary cuts than eventually occurred.

… The Fed also participated in the savings-and-loan bailout of the early 1990s, although the major part of that effort was under the Resolution Trust Corporation. That bailout ended up costing the taxpayer, but the S&Ls were outside of the Fed's control.

… unsuccessful Fed chairmen don't get reappointed.

David Wyss, “Greenspan’s Daunting Example,” BusinessWeek, 2/02/06.