October 3, 2007 (LPAC)--Alan "Bubbles" Greenspan finally admitted that it was the policy of repackaging mortgages into securities -- which at the time, he called "unprecedented economic growth" -- that caused the financial system to blow up.

Greenspan made the admission on October 2nd, while traveling in Europe to promote his new book, "The Age of Turbulence," the International Herald Tribune reported today.

"People always say it's the subprime market that created this crisis... [but] It's the subprime asset-backed market which did," Greenspan said.

"As a consequence of that, there's going to be some rethinking about collateralized debt obligations. The Wall Street firms were under real pressure to supply asset-backed securities, and the Wall Street firms were pressing the lenders to give them more raw material. Credit standards just went straight down, and applications for subprime mortgages soared. The consequences of that are evident," Greenspan said.