In a speech to a Fed conference on access to capital markets, the Fed chairman again praised the performance of the economy as "exemplary," and gave no hints that the Federal Open Market Committee is contemplating raising rates when it meets on March 30.
In two speeches in two days, he has passed on golden opportunities to prepare the financial markets for a rate hike, if he wanted to. Other than the comment at his Humphrey-Hawkins testimony before Congress two weeks ago about possibly re-evaluating the rate cuts of the fall, Greenspan has said nothing to imply that he's unhappy with the current economy or with the markets' expectations about Fed policy.
The bulk of Greenspan's remarks were a variation of his "creative destruction" speech, in which the nation's central-banking chief extols the virtues of the dynamic capitalist system that creates new companies, new markets and new ideas as it destroys its old and inefficient ways.
"I never cease to be amazed at the ability of our flexible and innovative economic system to take advantage of emerging technologies in ways that raise our productive capacity and generate higher asset values," Greenspan said.
He gave special attention to the capital needs of small businesses, which he said were "crucial players" in creating new ideas. Small companies will continue to rely primarily on the savings of owners, family and friends for start-up capital, but other sources of equity and debt financing are becoming more available as the financial markets take advantage of technological and conceptual advances.
With the banking industry consolidating into fewer, larger banks, smaller banks will move into niche markets that target capital and other financial services to smaller businesses, he said.
"Barriers still prevent the free flow of capital and people to their most productive employment," he said. "In the small business sector, potential impediments include: lack of market information, difficulties in assessing risk, high transaction costs for small loans, and, in rural areas, special challenges associated with geographic distance from lenders and potential markets."
Greenspan said the evidence points to continued discrimination by the financial markets against minority-owned firms. If the discrimination not based on economic factors, he said "costs are higher, less real output is produced, and national wealth accumulation is slowed."
Written By Rex Nutting, Washington bureau chief for CBS MarketWatch