This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.

You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/business/7017568.stm

The article has changed 2 times. There is an RSS feed of changes available.

Version 0 Version 1
Greenspan: 'We saw credit risks' Greenspan: 'We saw credit risks'
(about 4 hours later)
The former head of the US Federal Reserve has denied that regulators failed to foresee the problems which caused the global credit crunch.The former head of the US Federal Reserve has denied that regulators failed to foresee the problems which caused the global credit crunch.
Alan Greenspan said they had not acted on concerns about complex and risky financial deals because only very wealthy people invested in them.Alan Greenspan said they had not acted on concerns about complex and risky financial deals because only very wealthy people invested in them.
In an interview with BBC Radio 4, he also said that he was increasingly pessimistic about the world economy.In an interview with BBC Radio 4, he also said that he was increasingly pessimistic about the world economy.
But Mr Greenspan said the risk of recession was "still less than 50-50".But Mr Greenspan said the risk of recession was "still less than 50-50".
However, he added: "It's still less optimistic than one would like."However, he added: "It's still less optimistic than one would like."
'Largest culprit''Largest culprit'
The credit crunch has brought havoc to global markets, and hit the UK with the crisis around Northern Rock.The credit crunch has brought havoc to global markets, and hit the UK with the crisis around Northern Rock.
One of the key causes was the bundling together and selling of debt from sub-prime mortgages, which subsequently saw high levels of missed payments.One of the key causes was the bundling together and selling of debt from sub-prime mortgages, which subsequently saw high levels of missed payments.
Institutions which were stung by this then became less keen to loan money elsewhere, resulting in a tightening of credit.Institutions which were stung by this then became less keen to loan money elsewhere, resulting in a tightening of credit.
"We did know what was going on and the reason we didn't stop them was that to a large extent these types of questionably egregious actions are taken by people who have their own money invested," he said."We did know what was going on and the reason we didn't stop them was that to a large extent these types of questionably egregious actions are taken by people who have their own money invested," he said.
"Hedge funds, who are presumably the largest culprit of all of this, are organisations in the US in which wealthy investors invest."Hedge funds, who are presumably the largest culprit of all of this, are organisations in the US in which wealthy investors invest.
"I must admit that I do not have considerable concern about their net worth going from 40 million to five million, which in many case is what's happened." "I must admit that I do not have considerable concern about their net worth going from 40 million to five million, which in many cases is what's happened."
Mr Greenspan also predicted that the era of low inflation was coming to an end.Mr Greenspan also predicted that the era of low inflation was coming to an end.
"I'm not really able to pinpoint the time but I'm reasonably confident that the inflation tranquillity that we have experienced throughout the world actually for the last 20 years is not something we can hope to readily replicate as we move into the future.""I'm not really able to pinpoint the time but I'm reasonably confident that the inflation tranquillity that we have experienced throughout the world actually for the last 20 years is not something we can hope to readily replicate as we move into the future."