Bush vs. Greenspan on ARMs

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President Bush, today: ‘One of the most troubling developments has been the increase in adjustable rate mortgages that start out with a very low interest rate and then reset to a higher rate after a few years.’

Alan Greenspan, as reported by Business Week in April 2004: ‘No less an expert than Federal Reserve Chairman Alan Greenspan has sung the praises of ARMs. In February (2004), he told credit union executives that such loans could have saved many homeowners tens of thousands of dollars over the past decade. He noted that ARMs are much more common in other countries, and he encouraged the mortgage industry to create more options. ‘The traditional fixed-rate mortgage may be an expensive method of financing a home,’ Greenspan said.’

Our take: (This is a joke, folks): It could be that Greenspan was confused, or deceived about ARMs. Perhaps he had no idea that they sometimes lead to higher mortgage payments.

Your thoughts? Comments? Insights?