Mr Greenspan knows more about roots of mortgage crisis

Mr. Alan Greenspan traced the cause of the mortgage meltdown to the aftermath of the Cold War ("The Roots of the Mortgage Crisis," WSJ, December 12, 2007, p A19). This explanation suits him well. More plausible, perhaps, is that the cause can be placed more recently to the period of time the Federal Reserve lowered its target for the federal-funds rate below 2 percent: 2002-2004.
The mortgage bubble can alternatively be seen as the result as ordinary families seizing the opportunity to acquire homes at low interest rates, initially at least. The adjustable rates mortgages, whose rules are better known to lenders, squeezed the borrowers when the Fed relentlessly increased the Fed-funds target from 1 to 5 1/4 percent in eighteen months. That the Fed may not be able to manage long term rates, as Mr. Greenspan argued, hardly mattered.
When rates come down again, borrowers should demand adjustable, but capped mortgage rates... as a hedge against Fed overshooting.