LAS VEGAS — From Alan Greenspan's perspective, anyone looking to regulators as the cause of, or solution for, the turbulence in the nation's mortgage markets is looking in the wrong place.
Mr. Greenspan was the keynote speaker at the opening session of the Bank Administration Institute's Retail Delivery conference here on Tuesday. Reporters were banned from covering the session, which drew an audience in the thousands.
According to people who attended, the former Federal Reserve Board chairman said that global market forces, and not lax central bank policy, had been the key drivers of the subprime boom and resulting credit crisis. Mr. Greenspan rejected a suggestion that regulation or legislation would resolve the market's problems, comparing that response to closing the barn door after the horse has run away. "The market is now over," he said. "Investors are going to stay away. You don't need legislation."
Attempts to contact Mr. Greenspan's office for comment were unsuccessful.
Mr. Greenspan estimated the value of securitized subprime loans at $900 billion, at par. He would not guess the ultimate impact of the credit crunch but indicated he considered recent estimates of losses reaching up to $800 billion were too high.
"The key question is the value of homes in America," he said. "That's an open-ended question. How much further will home prices decline?"
During his presentation, staged as an interview with the British journalist Gerard Baker of The Times of London, Mr. Greenspan attributed the current crisis in part to the historic shift of Russia and China to market capitalism. The consequent excess of savings in those markets, which drove global interest rates down, helped create the easy credit environment that put buyers in homes they ultimately could not afford.
"It's reassuring to know we can blame the communists for this," Mr. Baker was said to have replied drily. Asked specifically whether the Fed bore responsibility for the housing bubble, Mr. Greenspan denied it. "We have very little control over the long end of the market," he said of the Fed.
He also said that surging world economic growth is likely to slow and the risk of inflation will return, as the disinflationary influences of those capitalizing societies wane. That shift was "a one-shot event," he said.
But he still held out hope that innovations could spur the economy to a fresh burst of noninflationary growth, though he admitted not having any clear idea of what these innovations might be. "If you could forecast them, they wouldn't be innovations," he said.
