Alan Greenspan gets his reward

John Paulson spends some of his subprime winnings on an endowed chair for the man who made it all possible

Topics: Alan Greenspan, How the World Works, Mortgage Crisis,

Alan Greenspan gets his rewardAlan Greenspan

In 2007, hedge fund manager John Paulson made $3.7 billion by betting against subprime mortgage-backed securities. He is notorious for convincing Goldman Sachs to create such securities, backed by the riskiest mortgages Paulson could identify, simply so he could bet against them — an astonishing act of irresponsibility that succintly captures, all by itself, the moral bankruptcy of Wall Street during the last decade.

Paulson made minor headlines a few weeks ago when he donated $20 million to his alma mater, New York University’s Stern School of Business. But I did not learn until this morning, via The Big Picture, that a portion of those funds was designated to endow the Alan Greenspan Chair in Economics.

“His generous gift will … further strengthen Stern’s research capability, particularly in the areas of finance and economics,” said Thomas F. Cooley, dean of NYU Stern.



Alan Greenspan is on record as supporting the innovation in mortgage products that ended up going kablooey in the dot-com bust. He was warned that mortgage lenders were running amok but did nothing to stop it. One can even argue that no single person has done more than Alan “the Maestro” Greenspan to intellectually support the thesis that the financial sector should be regulated as little as possible.

So, to be blunt, Alan Greenspan’s hard work made John Paulson’s big bet possible. Let’s hope at least some of the students taught by whoever occupies the Greenspan chair devote their energies to understanding exactly how that happened.

Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

Featured Slide Shows

  • Share on Twitter
  • Share on Facebook
  • 1 of 11
  • Close
  • Fullscreen
  • Thumbnails

    "Roman Candle" turns 20: Secrets of Elliott Smith's accidental masterpiece (slideshow)

    Elliott and the friends with whom he recorded in middle school in Texas (photo courtesy of Dan Pickering)

    "Roman Candle" turns 20: Secrets of Elliott Smith's accidental masterpiece (slideshow)

    Heatmiser publicity shot (L-R: Tony Lash, Brandt Peterson, Neil Gust, Elliott Smith) (photo courtesy of JJ Gonson photography)

    "Roman Candle" turns 20: Secrets of Elliott Smith's accidental masterpiece (slideshow)

    Elliott and JJ Gonson (photo courtesy of JJ Gonson photography)

    "Roman Candle" turns 20: Secrets of Elliott Smith's accidental masterpiece (slideshow)

    "Stray" 7-inch, Cavity Search Records (photo courtesy of JJ Gonson photography)

    "Roman Candle" turns 20: Secrets of Elliott Smith's accidental masterpiece (slideshow)

    Elliott's Hampshire College ID photo, 1987

    "Roman Candle" turns 20: Secrets of Elliott Smith's accidental masterpiece (slideshow)

    Elliott with "Le Domino," the guitar he used on "Roman Candle" (courtesy of JJ Gonson photography)

    "Roman Candle" turns 20: Secrets of Elliott Smith's accidental masterpiece (slideshow)

    Full "Roman Candle" record cover (courtesy of JJ Gonson photography)

    "Roman Candle" turns 20: Secrets of Elliott Smith's accidental masterpiece (slideshow)

    Elliott goofing off in Portland (courtesy of JJ Gonson photography)

    "Roman Candle" turns 20: Secrets of Elliott Smith's accidental masterpiece (slideshow)

    Heatmiser (L-R: Elliott Smith, Neil Gust, Tony Lash, Brandt Peterson)(courtesy of JJ Gonson photography)

    "Roman Candle" turns 20: Secrets of Elliott Smith's accidental masterpiece (slideshow)

    The Greenhouse Sleeve -- Cassette sleeve from Murder of Crows release, 1988, with first appearance of Condor Avenue (photo courtesy of Glynnis Fawkes)

  • Recent Slide Shows

Comments

0 Comments

Comment Preview

Your name will appear as username ( settings | log out )

You may use these HTML tags and attributes: <a href=""> <b> <em> <strong> <i> <blockquote>