Alan Greenspan

Quick facts

Key positions

Biography

Alan Greenspan was born March 6, 1926, in New York City. He studied music at the Juilliard School and played saxophone and clarinet in the Henry Jerome jazz band before turning to economics, eventually earning his bachelor’s (summa cum laude), master’s, and doctoral degrees from New York University. He ran the economic consulting firm Townsend-Greenspan & Co. before entering government as chairman of President Ford’s Council of Economic Advisers (1974–1977).

In the early 1950s, Greenspan joined the inner circle of novelist and Objectivist philosopher Ayn Rand — the “Ayn Rand Collective” — and was among those who read Atlas Shrugged in manuscript while Rand was writing it. He contributed essays to her 1966 book Capitalism: The Unknown Ideal, including a defense of the gold standard. Rand stood beside him at his 1974 swearing-in as CEA chairman, and the two remained friends until her death in 1982. Economist Joseph Stiglitz later said Greenspan “didn’t really believe in regulation” — a conviction that, by Greenspan’s own account, he held “for 40 years or more.”

Nominated to chair the Federal Reserve by Ronald Reagan in August 1987 and reappointed by George H.W. Bush, Bill Clinton, and George W. Bush, Greenspan served 19 years — the second-longest tenure in the position. In 1998, when CFTC chair Brooksley Born proposed studying regulation of the over-the-counter derivatives market, Greenspan led the opposition. He coordinated with Treasury Secretary Robert Rubin and SEC chairman Arthur Levitt to oppose her concept release, and on July 24, 1998, testified to Congress urging a standstill on the CFTC’s rulemaking, arguing that the regulation would create legal uncertainty and impede the efficiency and innovation of the derivatives market. Congress passed a moratorium stripping the agency of authority over derivatives; Born resigned on June 1, 1999. The following February, TIME put Greenspan, Rubin, and Summers on its cover as “The Committee to Save the World.” Greenspan also supported the 1999 Gramm-Leach-Bliley Act, which repealed key provisions of the Depression-era Glass-Steagall Act separating commercial and investment banking.

The unregulated derivatives market Born had warned about sat at the center of the 2008 financial collapse. Testifying before the House Committee on Oversight and Government Reform on October 23, 2008, Greenspan acknowledged he had “found a flaw” in his free-market model and said those who, like himself, had trusted lenders’ self-interest to protect shareholders were “in a state of shocked disbelief.” Asked by chairman Henry Waxman whether his ideology had failed, Greenspan replied: “Precisely. That’s precisely the reason I was shocked, because I had been going for 40 years or more with very considerable evidence that it was working exceptionally well.” In 1997, at age 71, he married NBC News journalist Andrea Mitchell.

Sources

1. Alan Greenspan — Wikipedia (birth, education, NYU degrees, Juilliard, Rand circle, career overview)
2. Alan Greenspan — Federal Reserve History (positions and tenure dates)
3. Greenspan Urges Congress to Block Derivatives Rules — Chicago Tribune, July 24, 1998 (Born-suppression testimony)
4. TIME Magazine Cover: The Committee to Save the World — TIME, February 15, 1999 (Greenspan–Rubin–Summers cover)
5. Greenspan Admits Free Market Ideology Flawed — NPR, October 24, 2008 (2008 “flaw” testimony)
6. Greenspan, Mitchell Wed — CNN AllPolitics, April 6, 1997 (marriage to Andrea Mitchell)