It is quite possible that there is nothing in this world more pointless than a Senate or Congressional hearing. It is the ultimate example of the futility of a committee. The same has to be said for the "Why is our Economy going to Hell in a Handbasket" hearings... but at least they are not talking to professional baseball players. [As an aside, I'd love it if someone could pull out their copy of the constitution and point me to where Congress has the authority over the rules of professional sporting events. I used to have a sticky on that page and I just cannot find it now.]
First off: Congress has some nerve asking "why" to the SEC and the Fed. "Congress" is why. And if they didn't know the answer to "why" then why the hell are they in congress in a position of "Economic Policy"?
But the real thing that makes me mad here is Mr. Greenspan himself. In a ridiculous move, Mr. Greenspan, in effect, said that his past history of pushing for deregulation of the economy -- he made a mistake. What? I know the world sees Mr. Greenspan as the chief proponent of the free market. I do not. I hold him to a much higher standard. Mr. Greenspan knows better. Calling himself an opponent of regulation, while holding the position of regulator-in-chief is such a tremendous contradiction that it is likely to make my head asplode. It's like some guy spouting the virtues of vegetarianism while eating a bacon wrapped celery stick. Mmmm. Bacon.
It was the Fed, Mr. Greenspan that set interest rates. Set. Interest. Rates. What bigger control over a lending debacle is there? If you set them too low, then too many people get loans. Some people that can't afford to get loans get them. Some people that can afford to get a smaller loan decide to get a bigger one they cannot afford. The self-regulating businesses [his words] cannot self regulate. What bank can compete with other banks rationally if other banks are loaning out cheaper loans because of the interest rate the Fed sets. The only way to compete with those banks is to lower your lending standards.
I said I hold Mr. Greenspan to a higher standard. This isn't your average idiot economist. First off, the guy is brilliant. Secondly, I have actually read the ideas he held in the 60's -- the very ideas he claims to be rethinking now -- and the very ideas that his job at the Fed was intent on destroying. If you are just starting to rethink these ideas now, then what made you work so hard to destroy them for the past 20 years?
[Later edit: Not that I am the one that gave them the idea, but a couple of hours after I wrote this aynrand.org published something very similar.]