Maestro — Chapter 4

1. 1. Greenspan assessed the odds of war with Iraq at 50-50 in August 1990, based on top-secret intelligence from Secretary of Defense Cheney.
2. 2. Greenspan argued the Fed should act as a stable anchor amid economic-political turmoil, advocating for no immediate rate action.
3. 3. Greenspan tied a quarter-point rate cut to passage of the 1990 budget agreement, despite opposition from some FOMC members.
4. 4. Treasury Secretary Brady pushed President Bush to sign the budget deal partly to gain leverage for lower interest rates from Greenspan.
5. 5. Greenspan ordered a quarter-point rate cut on October 29, 1990, after Congress passed the budget agreement.
6. 6. Citibank was near collapse in 1990, with the FDIC grading it a 4 out of 5, indicating severe insolvency.
7. 7. Corrigan secured a $1.2 billion investment from Prince Alwaleed bin Talal under strict conditions that he remain a passive investor.
8. 8. Greenspan used low short-term rates to boost bank profits and resolve the credit crunch, enabling banks to rebuild capital.
9. 9. The Resolution Trust Corporation sold billions in real estate at bargain prices, with entrepreneur Joe Robert making $3 billion profit.
10. 10. Greenspan acknowledged the economy was in recession by December 1990, but warned against over-easing, fearing success might overshoot.