Alan Greenspan, who served as chairman of the Federal Reserve for nearly 19 years under four presidents and shaped American monetary policy from Black Monday in 1987 to the eve of the housing bust, died Monday at his home of complications from Parkinson's disease. He was 100.
His wife, NBC News chief Washington correspondent Andrea Mitchell, confirmed the death. Greenspan's tenure, the second-longest in Fed history behind William McChesney Martin's, defined an era in which the central bank moved from cryptic obscurity to the center of American economic life, and in which a former jazz clarinetist who studied under Ayn Rand became, in the description of one mid-1990s Washington Post profile, arguably the nation's most powerful person after the president.
The Maestro era
President Ronald Reagan appointed Greenspan to succeed Paul Volcker on Aug. 11, 1987, 69 days before the Dow Jones Industrial Average fell 508 points, or 22.6 percent, in a single session. The next day Greenspan pledged the Fed's readiness to serve as a source of liquidity to support the financial system and cut short-term rates to keep banks lending. The Dow recovered more than half its losses within two days, and Greenspan acquired the sobriquet that followed him for the rest of his career: the Maestro.
He was reappointed by Presidents George H.W. Bush, Bill Clinton and George W. Bush, retiring in 2006. His Fed presided over the 1997 Asian financial crisis, the 1998 Russian default and Long-Term Capital Management bailout, the Sept. 11 attacks and the dot-com boom and bust. CBS News and the Washington Examiner both note that the period coincided with what economists call the Great Moderation, a stretch of low inflation and steady growth from the mid-1980s through 2007.
Words and the markets
Greenspan's tools were interest rates and language, and he wielded the second with as much deliberation as the first. In a Dec. 5, 1996 speech he asked how policymakers could know "when irrational exuberance has unduly escalated asset values," and the Tokyo stock market fell 3 percent on the phrase before other markets followed. The dot-com rally resumed and ran four more years.
The Greenspan style of public utterance — long sentences that resolved into deniability — was deliberate. "It's a language of purposeful obfuscation to avoid certain questions coming up, which you know you can't answer," he told CNBC in 2007. "So, you end up with when, say, a congressman asks you a question, and [you] don't want to say, 'no comment,' or 'I won't answer,' or something like that. So, I proceed with four or five sentences which get increasingly obscure. The congressman thinks I answered the question and goes on to the next one."
The criticism
The Maestro reputation did not survive 2008 intact. Critics, including some former colleagues, argued that the low-rate policies of the early 2000s — what the Washington Examiner and others called the Greenspan put — fed the housing bubble that produced the financial crisis two years after he left office. Appearing before Congress in October 2008, Greenspan said he had found a flaw in his thinking and that the failure distressed him, while maintaining that no regulator had been smart enough to foresee what he called a once-in-a-century credit tsunami. He told USA Today the next year that on the subprime charge, "I'm innocent."
A final dissent
In January, Greenspan signed a joint statement with more than a dozen former Fed and Treasury officials denouncing the Trump administration's criminal probe of Fed Chair Jerome Powell as an unprecedented attempt to use prosecutorial attacks to undermine central bank independence. It echoed a 2019 rebuke he had delivered on CNBC after President Trump pressured the Fed by tweet. "He's wrong in even discussing the issue," Greenspan said then. "The Federal Reserve is a very professional outfit."
Greenspan is survived by Mitchell, whom he married in 1997 in a ceremony officiated by Supreme Court Justice Ruth Bader Ginsburg. Funeral arrangements were not immediately announced.