Greenspan: Housing bubble was caused by mortgage rates

03/11/2009 | Wall Street Journal, The

Writing in a Wall Street Journal commentary, former Federal Reserve Chairman Alan Greenspan defends his tenure and argues that central bank policies did not create the housing bubble that led to the financial crisis. He blames the speculative euphoria on lower mortgage rates. "This correlation between home prices and mortgage rates was highly significant, and a far better indicator of rising home prices than the fed-funds rate," Greenspan writes.

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