Greenspan notes Fed’s flaws

Alan GreenspanEx-Federal Reserve Chairman Alan Greenspan has acknowledged the Fed’s failure to grasp the magnitude of the housing bubble, but offered some policy prescriptions to avoid another crash.  Economics Professor Laurence Kotlikoff, whose new book “Jimmy Stewart is Dead” is about bankings’s future, applauds Greenspan for saying banks should have to hold bonds that automatically covert to equity when capital falls below a certain threshold.

“That’s a big step toward ‘Limited Purpose Banking,’ which I’ve been proposing and which Bank of England Governor Mervyn King is very strongly considering.”

Contact Laurence Kotlikoff, 617-353-4002, kotlikoff@bu.edu

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