"The house price bubble, the most prominent global bubble in generations, was engendered by lower interest rates, but... it was long-term mortgage rates that galvanized prices, not the overnight rates of central banks," he told a panel investigating the causes of the financial crisis.
Greenspan has been criticized for the low interest rates led to the housing bubble, which eventually burst in 2008 and caused the economy into a deep recession.
"The recent crisis reinforces some important messages about what supervision and examination can and cannot do," Greenspan said in written testimony before the Financial Crisis Inquiry Commission. "History tells us they cannot identify the timing of a crisis, or anticipate exactly where it will be located or how large the losses and spillovers will be."
Regulators cannot successfully use "the bully pulpit" to manage asset prices, and they cannot calibrate regulation and supervision in response to movements in asset prices, said the former Fed chief.
"Nor can they fully eliminate the possibility of future crisis, " he added.
Greenspan admitted there were "an awful lot of mistakes" in his two decades as Fed chief, but that he was right 70 percent of the time.
"I was wrong 30 percent of the time, and there were an awful lot of mistakes in 21 years," he said.
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Gold surges to nearly three month high
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