Greenspan Speaks
Former Fed Chairman Alan Greenspan said he became aware of the subprime mess in late 2005:

Former Federal Reserve Chairman Alan Greenspan admits he “didn’t really get it” that the subprime lending trend was significant enough to hurt the economy until very late 2005, but still defends his lowering of interest rates from 2001 until 2004 that critics say caused the crisis in the first place. Greenspan, who led the U.S. Federal Reserve Bank through 18 years and four presidents, speaks to Lesley Stahl in his first major interview, to be broadcast on 60 MINUTES Sunday, Sept. 16 (7:00-8:00 PM, ET/PT) on the CBS Television Network.

The quote above is from today's Wall Street Journal and was extracted from an upcoming CBS 60 Minutes interview with Greenspan. I am not going to pick on Greenspan because I think he did a great job as Fed Chairman. But it is strange, or maybe just coincidental, that his concerns started to arise just after housing prices crested in the summer of 2005. I find it hard to believe that he did not know the level and exotic nature of the subprime mortgage market until late 2005. I guess as long as real estate was rising and the subprime borrowers could refinance into other mortgages the subprime market was not a problem. I do believe that the leveraged economy - i.e. leveraged consumer - has been the primary monetary policy of the Bush administration. This was fueled by low rates and the explosion in home borrowing.