Ex-Fed chair says woes could spill over into other sectors; sees problem of high housing prices rather than mortgage quality.
March 15 2007: 2:16 PM EDT
BOCA RATON (Reuters) -- Former Federal Reserve Chairman Alan Greenspan said on Thursday there was a risk that rising defaults in subprime mortgage markets could spill over into other economic sectors.
Speaking to the Futures Industry Association, Greenspan conceded that it was "hard to find any such evidence" about spillover from housing yet. But he added: "You can't take 10 percent out of mortgage originations without some impact."
Greenspan said the downturn in U.S. housing markets appeared to stem more from high housing prices than from a decline in mortgage quality but said he was not downplaying problems in so-called subprime loans.
He said that subprime woes were "not a small issue" and seemed to result primarily from buyers coming into lofty housing markets late after big price runups that had left them vulnerable to hikes in adjustable mortgage rates.
In his remarks, the ex-Fed chairman declined to comment on interest rates or current Fed policy.