While acknowledging that US roads and bridges could stand some improvement, former Federal Reserve chairman Alan Greenspan said this week that he did not see funding being available for the major infrastructure bill envisioned by incoming President Donald Trump.
“I don’t deny that we need that,” Greenspan said, referring to Trump’s proposal to spend up to $1 trillion on improving the nation’s infrastructure. “I’m just basically saying that it’s going to be very difficult to fund it.”
Speaking at the Private Equity International CFOs & COO’s Forum in New York, Greenspan focused his remarks on the need for entitlement reform and the economic impact of the Dodd-Frank Act. Dodd-Frank has generally been a negative for the US economy, he said, but scrapping it and starting from scratch will be very difficult.
Greenspan said it would be a “remarkable event” if Trump repealed the act, given its density.
“The complexity of unwinding such regulation embedded in the system makes it nearly impossible. The Trump administration might take half of it down but I don't think that's enough,” he said.
He added one small positive aspect of the act is its increased capital requirements, and while he would eliminate all regulations to financial intermediaries, he would require they retain 20 percent of their capital, rather than investing it.
Greenspan, who once described private equity as the “investment vehicle of the 21st century,” was chairman of the Federal Reserve System between 1987 and 2006.
His five terms at the helm were unprecedented, and his influence over the economy unparalleled. On 26 February 2007, Greenspan forecast a possible recession in the US before or in early 2008. Stabilising corporate profits are said to have influenced his comments. The following day the Dow Jones Industrial Average decreased by 416 points, losing 3.3 percent of its value.