GOP presidential contender Herman Cain is surging in the polls, but his support of Alan Greenspan is unlikely to win approval from his Tea Party fans.
At the Republican debate Tuesday night, Cain touted the former chairman as the best leader the Federal Reserve has had in the past 40 years, even though the controversial chairman has admitted that his decisions weren’t always right.
“The way Alan Greenspan oversaw the Fed and the way he coordinated with all of the Federal Reserve banks, I think that it worked fine back in the early 1990s,” said Cain, who served as chairman of the Federal Reserve Bank of Kansas City.
Greenspan, who retired in 2006, has admitted that he was partially wrong in putting his faith in the free market and that the economic crisis changed his ideology and view of the world.
“I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in firms,” he told a House Committee three years ago. “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.”
“I’ve found a flaw,” Greenspan said, when asked whether his ideology on free markets pushed him to make decisions. “I don’t know how significant or permanent it is. But I’ve been very distressed by that fact.”
Many economists blame Greenspan for pushing policies that aided the country’s downward economic spiral, specifically keeping interest rates low for too long and creating a bubble in the housing market.
The Federal Reserve is a prime target for Tea Partiers, many of whom argue that it should be abolished altogether. Many conservative activists blame the Federal Reserve for rising debt, high inflation and a weak dollar. The Maine Republican Party went so far last year as to adopt the official position that the Federal Reserve be ended as the United States’ central bank. A Cain rival, Rep. Ron Paul, R-Texas, supports ending the Federal Reserve and assailed Cain for idolizing Greenspan.
“Alan Greenspan was a disaster. Everybody in Washington — liberals and conservatives — said he kept interest rates too low, too long,” Paul said. “Certainly, Alan Greenspan has ushered in the biggest bubble.”
But Cain is standing by his words, telling C-SPAN that Greenspan, “in the earlier part of his career, he did do a good job.”
“Alan Greenspan did a great job for a number of years,” the former Godfather’s Pizza chief executive said. “Yes, some people question his decisions that he might’ve made in later years, but overall I disagree with congressman Ron Paul.”
Cain has surged in polls, running neck and neck with leading contender Mitt Romney.