Washington - For weeks USAction and a growing number of the nation's most respected economists
have called for greater financial regulation and government oversight of financial institutions
as a result of the Wall Street collapse and $700 billion government bailout package.
Today, former Federal Reserve Chairman Alan Greenspan admitted under pressure that free-wheeling
ideology championed by fiscal conservatives is at least partly responsible for the "credit tsunami"
that has pushed this country into a recession.
But in a tense exchange with Rep. Henry Waxman, the California Democrat who is chairman of the
House Committee on Oversight and Government Reform, Mr. Greenspan conceded a more serious flaw
in his own philosophy that unfettered free markets sit at the root of a superior economy.
"I made a mistake in presuming that the self-interests of organizations, specifically banks and
others, were such as that they were best capable of protecting their own shareholders and their
equity in the firms," Mr. Greenspan said.
Questioned by Rep. Waxman, Greenspan said he was "shocked" that the economic philosophy he has
championed for the past 40 years has completely failed.
Alan Charney, USAction program director, wholeheartedly agreed. "Reality has proven that the
laissez-faire free market philosophy just does not work in the long term," Charney said. "At a
minimum, there must be strict government oversight and regulations of our financial institutions
to get this economy moving again."
"We appreciate Greenspan's sincerity and realize it is not easy for someone to admit that
his view of how the economy works has a serious flaw," Charney added. "That is why it is time
for us to embrace the idea that we need bold, new economic policies to keep things from going
from bad to worse. We certainly can't keep doing what we have been doing."
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