After 18 years of service for the Federal Reserve, former Chairman Alan Greenspan decided to leave the public sector. His new opportunities provided him a pretty decent living – an $ 8.5 million for a book deal and a few high-priced consulting jobs.
But, despite praise through four Republican and one Democratic administration, it’s his private sector work getting heavy criticism. One CNBC report called it “unseemly.”
The January 15 Wall Street Journal reported Greenspan, 81, signed on with Paulson & Co., a hedge fund [1], the third consulting contract he has signed since retiring from the Fed. But, that had The Wall Street Journal hinting at a conflict of interest.
“Former Federal Reserve Chairman Alan Greenspan, whom some blame for fueling a housing bubble, is signing on as an adviser to hedge-fund firm Paulson & Co., which has profited handsomely from the collapse of that bubble,” Greg Ip and Gregory Zuckerman wrote in the Journal.
Vince Farrell, a CNBC contributor, was upset about Greenspan’s post-Fed career. He said Greenspan was acting incorrectly and cashing in on his name.
“To me this is just unseemly,” Farrell said on CNBC’s January 15 “Power Lunch.” “The man occupied the pinnacle of power and hey, he’s making a pretty good living. I can’t understand the motivation because I think he’s destroying the reputation that he led the Fed with.”
Another criticism by the media of Greenspan has been his reluctance to go quietly and, instead, remain in the public eye.
“Well, I don’t have a problem with him earning a living and he’s got a right earning living,” James Bianco, president of Bianco Research, said. “But, he is kind of cashing in on his reputation and he’s making it difficult for the current Federal Reserve Chairman Ben Bernanke. He’s been speaking publicly a lot for very high profile speeches and he’s been at odds with the Federal Reserve for what they’ve been saying.”
Bianco said Greenspan’s employment by Paulson & Co. was “a kind of thank you payment.” According to the Journal, Paulson’s funds earned $15 billion in 2007 for betting “against the housing market.”
Besides Paulson & Co., Greenspan has made consulting deals with Pimco and Deutsche Bank. Greenspan’s book, “The Age of Turbulence,” has spent 16 weeks on The New York Times’ “Nonfiction Best Sellers List” and is listed in the 11th spot in the January 20 list [2].