Actually, Greenspan made very similar comments in the wake of the Enron and accounting firm scandals back in 2002 or so. He wasn't as directly involved in the regulatory changes involved, and maybe not at all, but he supported them. He later acknoweldged that he was befuddled that companies and the people in them would make such short-term, irrational, even illegal decisions that would compromise their firm's future and even land some of them in prison.

I actually think Greenspan is sincere in this, not playing a "shocked, shocked that fraud is going on in here!" game. In my grad school years I knew a number of econ students (my school had one of the top 3 econ departments in the nation -- many Nobel winners) of the Ayn Rand persuasion, and deep down they really could not get how someone would behave irrationally. I mean just could not get it -- by which I don't merely mean, "didn't understand it but knew it was common", but despite all the historical evidence to the contrary, found it so inconceivable that their prediction on what would happen if you removed all laws, regulations, etc. is that fraud, bubbles, etc., wouldn't happen because people _always_ make rational decisions.

Similarly, such people had real problems with the notion that maybe there was a cost-benefit justification to welfare programs in severely bad economic times, because a bit of bread for the poor is cheaper than the massive police and security forces needed if you have a large, starving urban poor population. They'd sort of acknowledge the history but angrily, angry that the poor wouldn't "follow the rules" and either find a way to make some money or just starve. Such people also found it impossible to believe in race or gender discrimination because why would a firm deprive itself of talent by judging a candidate by anything but their productivity?

Not malicious, but so utterly wrapped in the belief of perfect rationality as a *reality*, not just just a simplication for the models, that their view of the world was as skewed as that of a physicist who really does believe that all chickens are frictionless spheres....