Greenspan commanded an amazingly naïve and gullible generation of financial regulators.

Sir Alan Greenspan starts out his “We need a better cushion against risk” March 27 with his silly chorus that all this mess was because we trusted “the enlightened self-interest of owners and managers of financial institutions”. If that was true, why would the world have contracted the services of Mr Greenspan?

Thereafter he gets into more real explanations though, like accepting that “regulators cannot fully or accurately forecast whether, for example, sub-prime mortgages will turn toxic”. Of course not, when Greenspan and his buddies in Basel decided that a bank could leverage itself 62.5 times to 1 as long as it lend to corporations rated AAA by human fallible credit rating agencies they showed themselves to be amazingly naïve and gullible regulators

Greenspan also writes about the need for higher capital requirements for the banks but before this even more important is to get the financial regulators to stop meddling and imposing their own risks preferences on the banks and letting that to the market.