October 23, 2008 (Thursday): Greenspan Gets Grilled; More Cuts in Detroit

In testimony before the House Committee on Oversight and Government Reform today, Alan Greenspan accepts partial responsibility for the housing bubble and ensuing credit crisis. “Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief,” he says, and concedes that his belief in bank’s ability to self-regulate was a “mistake.” Greenspan testifies before lawmakers alongside former Treasury and Securities and Exchange Commission officials. (For more on this news, click here, here and here.)

Sheila Bair, FDIC chairwoman, says the U.S. will do more to prevent foreclosures by giving some guarantees to lenders on mortgages that are modified. The new measures are announced at a Senate Banking Committee hearing, where Bair concedes “we are falling behind” in helping homeowners hold onto their properties. While more details will be released over the next few weeks, the plan would be run by the Treasury Department under the Emergency Economic Stabilization Act. (For more on this news, click here, here and here.)

Chrysler and General Motors both say they will have more layoffs as the car companies pave the way for a possible merger. GM’s U.S. sales have dropped 18% so far in 2008. Chrysler will shed almost 2,000 factory jobs. (For more on this news, click here, here and here.)