The Fed Did Indeed Cause the Housing Bubble

To: The Wall Street Journal

Re: “The Fed Didn’t Cause the Housing Bubble”

By: Alan Greenspan, former Chairman of the Federal Reserve

Dated: Wednesday, March 11, 2009

Ladies and Gentlemen:

In his article on your opinion page, “The Fed Didn’t Cause the Housing Bubble,” Alan Greenspan attributes the housing bubble to lower interest rates between 2002 and 2005. That’s amazing to me.

My company served as lead financial advisor to the Federal Housing Administration between 1994 and 1997.  I watched both the Administration and the Federal Reserve aggressively implement the policies that engineered the housing bubble. These are described at my website and in my on-line book,Dillon Read & the Aristocracy of Stock Profits (

One story, for example, is the following:
“In 1995, a senior Clinton Administration official shared with me the Administration’s targets for Fannie Mae and Freddie Mac mortgage volumes in low- and moderate-income communities. We had recently reviewed the Administration’s plans to increase government mortgage guarantees — most of these mortgages would also be pooled and sold as securities to investors. Even in 1995, I could see that these plans would create unserviceable debt loads in communities struggling with the falling incomes expected from globalization. Homeowners would default on mortgages while losses on mortgage-backed securities would drain retirement savings from 401(k)s and pension plans. Taxpayers would ultimately be hit with a large bill . . . but insiders would make a bundle. I looked at the official and said that the Administration was planning on issuing more mortgages than there were houses or residents. “Shut up, this is none of your business,” the official snapped back.”

From: “Sub-Prime Mortgage Woes Are No Accident” /sub-prime-mortgage-woes-are-no-accident/)

One of the dirty little secrets behind the housing bubble is the long standing partnership of narcotics trafficking and mortgage fraud and the use of the two in combination to target and destroy minority and poor communities with highly profitable economic warfare. This model is global. It is operating in counties throughout the world as well as in US communities.

Of all the actions that the Federal Reserve took to engineer this housing bubble, the one that I would note is Mr. Greenspan’s efforts to pacify Congresswoman Waters regarding allegations of government sponsored narcotics trafficking at a time when open Congressional hearings would have contributed to an important discussion of the operations engaging in mortgage fraud in minority communities. See, “Financial Coup d’Etat,” Chapter 16, Dillon Read & the Aristocracy of Stock Profits which was written in 2005 and published in April 2006, drawing from an article I first published in May 1999.

“On December 18, 1997, the CIA Inspector General delivered Volume I of their report to the Senate Select Committee on Intelligence regarding charges that the CIA was complicit in narcotics trafficking in South Central Los Angeles. Washington, D.C. ’s response was compatible with attracting the continued flow of an estimated $500 billion–$1 trillion a year of money laundering into the U.S. financial system. Federal Reserve Chairman Alan Greenspan in January 1998 visited Los Angeles with Congresswoman Maxine Waters — who had been a vocal critic of the government’s involvement in narcotics trafficking — with news reports that he had pledged billions to come to her district. In February Al Gore announced that Water’s district in Los Angeles had been awarded Empowerment Zone status by HUD (under Secretary Cuomo’s leadership) and made eligible for $300 million in federal grants and tax benefits.”

Alan Greenspan is a liar. The Federal Reserve and its long standing partner, the US Treasury, engineered the housing bubble, including the fraudulent inducement of America as part of a financial coup d’etat. Our bankruptcy was not an accident. It was engineered at the highest levels.

Your publication of Greenspan’s breezy and bogus history of the housing bubble insults your readership.

Best Regards,

Catherine Austin Fitts
Assistant Secretary of Housing – Federal Housing Commissioner, Bush I


  1. I think the world of Catherine Fitts and we are lucky to have such a person around.
    I have only recently discovered her and as such am eagerly reading everything I can written by her.
    She is right up there with Bill Moyer’s and Ron Paul both of which are very good people according to me. The strange thing is all three are religious something I am not and even stranger is my overlooking this obvious flaw that all three of my heroes have. Haha, this will betray myself to some of my friends since I speak so highly of all three and no one else. Thank you Ms. Fitts.

  2. Catherine,

    Your letter, even if it doesn’t get printed is already making the rounds on the net. I am so in awe of your continued advocacy for our republic. No doubt you have seen the overwhelming response to the Daily Show outing of the complicit financial media. I would like you to be a guest on the show. It took me some time to absorb all that you have shared and the material that you cover is expansive, but it would be wonderful if you could at least point people in that direction so that they could research this on their own.

    I have put your name up as a guest. I would like the rest of the country to meet someone whom I consider a national treasure. Fans can vote up or down to show how much they want a guest to appear.

    or this link

    Kindest regards,


  3. Reminds me of Jim Cramer and the entire CNBC financial reporters missing the tanking of the Dow, and how John Stewart is skewering all of them, and for damn good reason! Too bad for Warren Buffett loves watching CNBC! If your info is crap, it doesn’t take a rocket scientist to know that your investing will be thus as well in time. Garbage in, garbage out. I used to be into CNBC. Now, I’m into Solari – people I can trust.

  4. Catherine hits out of the ballpark again with her stellar commentary! In my eyes, she has been a remarkable heroine since I first encountered her writings and work about five years ago after stumbling upon Mike Ruppert’s From The Wilderness website and his book Crossing the Rubicon.

    We are so fortunate to experience Catherine’s formidable intellect and deep sense of integrity. A national treasure indeed!

  5. Nobody Important,

    The truthseekers don’t get the attention they deserve because the people don’t want the bad news and the ones creating the problems don’t want their misdeeds to be exposed. The media shills for the criminals are happy to dish out fluff and opinions that neglect the underlying truth.

    Patrick Byrne is going to be on The Daily Show tonight. He has been pointing out media corruption for several years and is considered the most hated (feared) man on Wall Street. If you caught Cramer lying to Jon Stewart, you can get the background stories in

    The clip from the Aaron Task interview was scrubbed from the internet when it ended up on youtube. A copy of it was downloaded somewhere and somehow managed to be the center of Cramer’s embarassing mea culpa on The Daily Show.

    It is time that everyone knows that the theft has happened and the money is gone. We can’t get it back. There isn’t enough money in the system to pay for all the theft. That is why it is being printed. Banana republic..

  6. The global bankers should have their assets ceased under the proceeds of crime laws.One thing I cannot understand is this. If an ordinary man is in liquidation and cannot pay off his debts then he will get threatening phone calls and letters from his bank to make repayment. They will terrorize him and eventually force him into bankruptcy. However,when the banks cannot pay their debts then they get bailled out to the tune of billions of dollars which everyone has to pay for.Which does this seem like to you, Justice or Tyranny.

  7. Very good article Catherine.

    There were probably billions made by insiders close to Greenspan who shorted the subprime securities vis credit default swaps, and understood the nature of the game.

    Perhaps they were the same who shorted Bear Stearns tipped by Dimon, Cox and Bernanke.

    John Olagues

  8. Very Good article Catherine.

    There were probably billions made by those who understood the nature of the game and shorted the subprime securities via credit default swaps.

    Perhaps they were the same who shorted Bear Stearns.

    John Olagues

  9. It is So-o-o-o apparent that we are owned. There isn’t enough guts in Congress to make anything happen and “they” know it. The over whelming majority of the Government (including our “several united states”) is bought and paid for. There must be action… and voting doesn’t cut it…we must have a bigger, grander plan. Enough of us DO know, but it appears none of us can find the key to unlock our prison doors… I know it is right in front of us… that we are so-o-o dumbed down and blind is embarrassing. Even in “following the money”… what does that do if no one can enforce the simple “law of the Land”… what do “they” fear? Even knowing about CAFR doesn’t even bring a sweat to “them”. It is too easy for “them” to say literally, “So what?”
    It is down to leaving to more sane third world countries..From Harry Potter’s conversation with Sirius Black, “Is it war?”,asked Harry. “It feels like it did before”,replied Sirius…

  10. I blame Greenspan, but not for the reasons you cite. The origins of the bubble came from the 2000 Presidential campaign. George W. Bush pledged to make massive cuts to personal income tax if he were elected.

    Instead of announcing that such extreme cuts were inflationary and would lead to massive budget deficits, Greenspan endorsed them, and then pursued a policy of keeping rates extremely low.

    The immediate result was a massive surge in housing prices and extreme overbuilding. The long-term consequences? Well, we are experiencing them right now.

  11. To answer Tims last question -justice or tyranny,I would add organised corruption on world wide scale as world wide bankers are well able to do.They are often of one ethinic group eating only kosher food.They respect each other but no one else.It is part of the how can you blame them?

  12. The khazar Central banking cabal has engineered EVERY major finacial crisis, MANY if not all wars. Hell, in the ’30’s Canada was adamant about it’s evidence that Lincoln’s killer was not a looney radical but an assassin hired by the Rothschilds to get rid of yet another bothersome Goy who wanted to get rid of the Central Bank, (again), in the United States of Israel. Although this news doesn’t surprise me, it’s damn refreshing to find someone not only wise enough to see it, but courageous enough to say it publicly.
    If you watch the talking heads on the toob, regarding the finacial mess, not ONE even HINTS at it being fractionalized banking and the FEDRES that engineered it all. When you begin seeing more and more of our buy out bux ending up in Israel along whith the peckerwoods that stole it, (where they’re SAFE from extradition back to Goyim nations and their loot is safe in banks even more secretive than Switzerland EVER was), maybe the sheeple will realize it.

  13. “On December 18, 1997, the CIA Inspector General delivered Volume I of their report to the Senate Select Committee on Intelligence regarding charges that the CIA was complicit in narcotics trafficking in South Central Los Angeles.” That is some revelation! But, it isn’t true and there is zero, zip, nada evidence to suggest such that report ever existed. There is no record and the media has nothing on it, other than among the paranoid conspiracy crowd, which is hardly credible. While I was active as a narcotics agent I was often amused at the accusations about my agency by people who “knew for a fact that…(insert rumor)” when they didn’t know squat, they were running off at the mouth. People in the DEA, the CIA, DOD, etc., are not mindless, robotic, zealots absent any sort of moral code, they are people of good character, recruited because of a clean record, good maturity, intelligence and education. So, in order to believe this crackpot story about the CIA being complicit in the narco trade you have to believe all these decent, mostly God fearing, 100% patriotic Americans, would sell out to the dark side and risk their careers, their good names and even prison sentences for what? Where’s their payoff? It’s absurd and only an ignorant paranoid nutcase on the fringe of sanity would even go there. If I for an instant ever though anyone in my agency or an allied agency was doing something this despicable and evil I would have busted them personally and it would have been front page news. But, this never happened in my 20 years of dedicated public service as an undercover agent and front line soldier fighting drug dealers and drug cartels and working real drug conspiracies on a daily basis. I would think that if anyone would have knowledge of the CIA being involved in something like what has been alleged I would know…and I never saw any evidence of that at anytime and I saw one hell of a lot more secret stuff than any of you will ever know about.

  14. Catherine says more in five hundred words than everybody else says in several thousand. Write your friends, copy the link, and spread the word. And the last time I checked, Bush (both of them), Clinton, Obama, Gore…none of them are Jewish, and the major property owner in Manhattan is the Episcopal parish of Trinity Wall Street, not a synagogue or a bank. Greed and duplicity, like generosity and kindness, are not the unique heritage of any ethnic group. The anti-Semitic balderdash on this page by cowards who are afraid sign their names is worthy of the tradition of the Klan. If you write things like this on the web take off the hood and sign you name.
    Mike Linton
    Murfreesboro, Tennessee

  15. You are very stupid if you think it is the Jews! Who is the largest and richest expatriate community in the WORLD?
    The Chinese. Now, who stands to benefit the most from the crisis – The CHINESE


  16. Catherine,

    Excellent. Keep up the great work! I’ll be digging and facebooking your letter for wider exposure and readership. I’m so bored with petty establishment pawns trying to exonerate those who, at least in more honest days, would have met with a fate no less than the gallows!


  17. Interesting article.

    But I am in the housing business in several states. There are a few problems with the math.

    There was a housing bubble for those who were rich.

    There never was a housing bubble for those who were poor. 2-3 bedroom homes in the urban areas of the country have always cost less then what it cost to actually build them. Period. That is not a bubble.

    Currently we have a housing crater in the urban areas of the country. Right now every major urban area has foreclosed homes that can NOT be sold for 50% to 1% of what it cost to build them.

    Next problem with the math. The banks are getting over 750 billion dollars to cover loses on foreclosures. That is a lie. The banks do not lose any money on mortgages and have never lost one single penny on a mortgage. The math is simple they get the money for less than 1% and loan it at over 5% and as high as 10% subprime. So as long as 1 out of 2 mortgages pay then the bank makes money. You do the math but it is simple. Now we have less than 1 million foreclosures at average of less than 1 thousand dollars interest per month for 12 months so the actual maximum lose of all foreclosures combined not counting all that paid is 12 Billion for a year!

    So what really is going on?

    It is simple, everyone in America is being lied to, and everyone talking about it is either an idiot, fool, paid off, liar or a little of all three.

    The Chinese and Indian governments on purpose created corporations and let stupid American corporations borrow money from American banks to steal everything that was not nailed down in America to include factories, material, technology and take it to China and India. China and India never ever ever ever planned on paying back the loans. That is why the trillions of debt is not getting paid! It never will get paid! That is how China and India both countries who dwarf America have 20% economic growth! They stole our money and used it to steal all of America’s resources that were not nailed down. And they did it by borrowing all of our money with no intention of repaying it!!!! We are all idiots in America. The Chinese and India used the greed of Wall street Against America!!!! And if we do not wake up and stop paying AIG and Citi and tarp money we will all be starving in the streets in 2 years!

    That is the real story!

    The Tarp is a lie and cover up!

    Aig and Citi bailout is a lie and a cover up!

    The real story is how China and India used American greed to loan corporations money to steal our manufacturing, technology and resources with the forethought of never repaying the loans!!! Now the idiots in America who were fooled and who did this want to walk away with millions in bonus’s while Americans are losing there jobs by the millions, being kicked out of there homes by the millions and the Chinese and India is laughing all the way to there new factories and technology centers!!!

    Wake up America, do the math and take it all back!!!

  18. If it is true that the Global Elite always created wars, revolutions and economic crisis, to multiply the debt on the average citizen, then the liar Greenspan served them very well!

  19. Actually, Jack, it is true. I spent years reading and research Gary Webb’s Dark Alliance and reviewing the CIA reports and testimony. And more.

    Perhaps you would like to explain to us how a half a trillion military and intelligence establishment is helpless up against all those African-American teenagers? Or why the NY Fed/Fed wires and clearing systems that aggregate and control all wire transfers and clearance are helpless to notice $500 billion – $1 trillion plus of annual money laundering.

    The reality is that no one needs to waste time running in circles on evidence games related to one particular narcotics trafficking operation. The truth is so obvious and the corruption so blatant that we can just use our common sense.

    Who is running the high margin, profitable businesses? The people with the money or the poor people?

    As someone once said to me, “I know how organized crime works. I dealt with the mafia when I was growing up. All I need to know when I watch the Harvard Endowment operate, is that I am watching the mafia model. Once I get over that I was the patsy and really did not know that the system was not legitimate, it is relatively easy to understand my world.”

    Wall Street is full of ****, so is Washington, and no offense intended, Jack, so are you.

  20. Name one country beside Israel which practices legalized apartheid, ethnic cleansing and now with a foreign minister who openly advocates it, laughs at all UN Resolutions and Human Rights Laws,commits continual acts of violence and massacres, and yet enjoys the full support of all Western leaders. If this is not from the power of organized Jewry around the world, what is it from? Why does the US and Europe act against their own interests in making enemies out of 300 million Arabs and over one billion Muslims, for this tiny little country that has the strongest army in the region including hundreds of nuclear warheads but claims the right of self-defense for itself but not others? Not one of Obama’s “bought and sold” gang or the “bought and sold” gang called Congress stood up to speak against the character assassination of Chas Freeman! Anyone who says Bush and the other puppets are not Jewish is fooled by who or what is really operating behind the scenes. When your country is run by the influence of people whose loyalty belongs to another country then it is not racist but patriotic to stand up for its defense.

  21. One more thing…I believe Mr. Linton is wrong about the biggest property owners in Manhattan. They happen to be 2 Jews, Jerry Speyer and Robert Tishman, who own the Rockefeller Center, the Chrysler Building and other skyscrapers.

    “Gawker’s publisher estimates that at least 19 of the Forbes 400’s 25 NYC billionaires are Jewish”.

    Frankly, I do not care if all the Jews were billionaires, as long as they do not use their money to corrupt the system and the media.

  22. When will our leaders care enough about the individuals, the people, to stop throwing money at the problem makers? The more bail out money diverted from the people, the greater the whole that is dug. The markets, supported by increasingly sized bailouts, only temporarily are buoyed as the underpinnings of debt upon debt provide new manipulations for scalping profits. A true economy is built upon the talents, abilities and stable business climates given to the individuals of a nation. Regularly dismantling our industries of yesteryear, our Mom & Pop enterprises, and the trades prized by generations of our own home grown peoples has riddled the infrastructure. Export the jobs and eventually there are fewer financially able to underpin the real economy. One might even think this obvious decade assault against the people of various developed nations is intentional.

  23. “The reality is that no one needs to waste time running in circles on evidence games related to one particularly narcotics trafficking operation. The truth is so obvious and the corruption so blatant that we can just use our common sense.”

    Dead on correct. Thanks, Catherine!

  24. Proteus–
    Wake up man and maybe try reading a book or two. China loses much in the current crisis due to the fact that their economy depends on exports to the West, not to mention their immense amounts of dollar reserves that they don’t want to see vanish with hyperinflation or a drop in the demand for the dollar. do your homework.

  25. i’m sorry the news escaped your incredibly vigilant notice although you need to look into it, because despite the fact that you claim you “would have known” had anything like that happened, one insuperable fact remains: it happened. it’s a fact jack. do a google search on iran contra and CIA and crack cocaine. to put it euphemistically, get your head out of your ass. You say that law enforcement officers aren’t mindless robots. do some justice to the profession since some of them just might be a last line of defense for the common folk when the proverbial shit hits the fan, and try not to act like one.

  26. i was in austrailia in 1997. a mainstream newspaper had a shocking book review of an american touring australia. he was a journalist allowed into a meeting of 500 global leaders discussing the new millenium. they planned to turn america and other counries into “80/20 societies,” where only 20% have any real work or wealth while the other 80% are “lulled along by ‘tittietainment.'” this referred to diversions such as sexual lures, among others. after reading that, i noticed that reading about latin american countries at that time, most had 805 at or below the poverty line. thus, the global leaders planned to turn america, and possibly other industrialized countries, into the third world model their puppet governments had created.

  27. I don’t think they intended to collapse the bubble, I think they intended to sustain it indefinitely, if you look at the entire sub-primke food chain it was really a tool for promoting and subsidizing mass immigration & illegal immigration.

    I’d like to say nearly every member of teh sub-prime food chain was engaged in promoting illegal & mass immigration but that would be an unsderstatement EVERY member of the sub-prime food chain was engaged in promoting mass immigration & illegal immigration, just look at their campaign donations, you can spot the sub-prime campaign donation recipients by their immigration report cards, there’s no deviation, everybody that took sub-prime campaign donation money voted for amnesty & mass immigration. It goes further too, everybody that stood firmly against illegal immigraiotn was obliterated with not only bi-partisan support but also with the support of the FBI. The FBI interveined in several senate & Congressional elections with leaks to discredit candidates in the middle of their elections, all the “FBI investigations” mysteriously disappeared when the candidate was eliminated.

    What we have here is a massive criminal conspiracy to both loot investors & promote mass illegal immigration and globalism.


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