More on Greenspan's "private" dinner with clients of Lehman Brothers:
'Greatest Central Banker Ever' Comes Down a Peg, Caroline Baum, Bloomberg: ...Former Federal Reserve Chairman Alan Greenspan ... was back to his old tricks of moving financial markets ... At a Tuesday night gathering hosted by Lehman Brothers Holdings Inc. for a handful of key clients, including some of the largest hedge funds, Greenspan held court on the economy and interest rates... Greenspan said that the changes wrought by globalization and the effects -- low long-term interest rates -- are a challenge to the Fed, necessitating more increases in short-term interest rates than are currently reflected in market prices.
"What a scam,'' said Bill Fleckenstein, president of Fleckenstein Capital in Seattle. "It's influence peddling at its finest.'' ... Greenspan didn't violate any laws or Fed regulations when he talked to Lehman's clients. "Board members who complete their term may meet with and speak to groups without restriction, provided they reveal no confidential information,'' a Fed spokesman said. The only other prohibition is representing another party (lobbying) before the Fed for a year after departing.
So Greenspan was well within the letter of the law in talking to clients. What about the spirit? ... At minimum, Greenspan evinced bad judgment by not letting some time pass before reasserting himself. His refusal to cede the limelight gracefully to his eminently qualified successor left a bad taste in people's mouths, many of whom refused to comment for the record. (Is it fear of reprisal, even without the force of the Fed behind him?)
Unlike other Fed governors, who honored the convention of not attending the final policy meeting before their departure, "Greenspan attended the last meeting and dictated the vote,'' said Joe Carson, director of economic research at Alliance Bernstein. ... Greenspan reportedly commented at the Lehman dinner on the housing market (slowing but the effects won't be obvious for another six months); the consumer (retail and auto sales are surprisingly strong); and inflation (contained thanks to the effects of globalization).
It was his comments on the likely future course of interest rates that will tarnish his legacy as "the greatest central banker who ever lived,'' ... Greenspan's choice exposed his real agenda all these years, for those who haven't been able to see it: the cult of his own personality at the expense of the institution. "He's addicted to power,'' Fleckenstein said. "If there is a silver lining in all of this, it's that the more he opens his mouth, the sooner he will be discredited.''
This is disappointing. To me, this behavior so soon after stepping down as Fed chair detracts from the dignity of the institution.