Greenspan late to see excessive lending

Former Federal Reserve Chairman Alan Greenspan acknowledges he failed to recognize early on that an explosion of mortgages to people with questionable credit histories could pose a danger to the economy.

In an interview, Greenspan said he was aware of "subprime" lending practices in which homebuyers got very low initial rates only to see them jacked up later, causing severe payment shock. But he said he didn't initially realize the harm they could do.

"While I was aware a lot of these practices were going on, I had no notion of how significant they had become until very late," he said in a CBS "60 Minutes" interview to be broadcast Sunday. "I really didn't get it until very late in 2005 and 2006," Greenspan said.

An excerpt of the interview was released Thursday.

Critics say the Greenspan Fed kept rates too low for too long in the early 2000s.

"They are mistaken," he said. "It was our job to unfreeze the American banking system if we wanted the economy to function."

Some believe Greenspan would have acted more aggressively than current Fed chief Ben Bernanke in dealing with the current financial crisis. "I'm not sure that's true," Greenspan said. "I think (Bernanke) is doing an excellent job."