This is priceless:

Alan Greenspan, the former Federal Reserve chairman, said Thursday that the current financial crisis had uncovered a flaw in how the free market system works that had shocked him.

Mr. Greenspan told the House Oversight Committee on Thursday that his belief that banks would be more prudent in their lending practices because of the need to protect their stockholders had proved to be wrong.

Mr. Greenspan said he had made a “mistake” in believing that banks operating in their self-interest would be enough to protect their shareholders and the equity in their institutions.

Mr. Greenspan said that he had found “a flaw in the model that I perceived is the critical functioning structure that defines how the world works.”

Mr. Greenspan, who headed the nation’s central bank for 18.5 years, said that he and others who believed lending institutions would do a good job of protecting their shareholders are in a “state of shocked disbelief.”

He said that the current crisis had “turned out to be much broader than anything that I could have imagined….”

Mr. Greenspan did not specifically address the criticism he is receiving now as being partly to blame for the current crisis.

On Mr. Greenspan’s relationship with the pseudo-philosopher Ayn Rand, see this.  For our earlier posting on this subject, see here.

UPDATE:  Jerry Dworkin (UC Davis) writes with the following apt observation:  "The mere fact that you would call Greenspan’s testimony ‘priceless’ indicates how far you are from an accurate (Randian) vision of how the world works."