Greenspan's Wet Dream

Alan Greenspan must have a special place in his heart for Andy Beal. After all, if every banker ran their bank like Andy Beal ran his, then Alan Greenspan would not have had to repudiate his Ayn Rand-style libertarianism. From Forbes:

By September 2004 Beal Bank's assets had climbed to $7.7 billion. Then Beal stopped buying, letting his loans run off. By September 2007 assets had shriveled to $2.9 billion, one-fifth of which was cold cash. He was worried that consumers had taken on too much debt and money was being lent to companies for next to nothing. "Every deal done since 2004 is just stupid," Beal says.

He began by pulling back from home loans--even those guaranteed by Fannie Mae ( FNM - news - people ) and Freddie Mac ( FRE - news - people ). Beal thought the two quasi-government agencies were over-leveraged. When staffers mentioned their guarantees in deal presentations he would fire back that these guarantees were "worthless."

A banker whose perceived self-interest led him to abstain from the housing/credit bubble - I think Alan Greenspan might go all Andy Samberg on us. Unfortunately, Beal was the exception. Still, Beal's prescience shows that for those who cared to ask questions, the fallout from the housing bubble was fairly obvious. Hoocoodanode, indeed.