The Greenspan Fed cut rates aggressively in 2001, and total mortgage debt (TMD) growth accelerated to what should have been an 10.4%. With rates dropping to as low as 1.25% in 2002, TMD expanded 12.1%. With rates dropping to 1.0% in 2003, TMD increased another 11.9%. Despite TMD increasing by a stunning 38% in three years, Fed funds remained at 1% through the first half of 2004. TMD growth surged to 13.5% in 2004, followed by 13.4% in 2005, and 11.6% in 2006.
Conclusion - The Greenspan Fed sat idly as mortgage credit doubled in just six years.