“Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity — myself, especially — are in a state of shocked disbelief,” the former Federal Reserve chairman conceded.
does NOT refute the basic underpinnings of free market economics. What this says is that self interest did rule at the expense of shareholder interests. While Washington might use this for an argument in greater regulation, trying to say it throws out rational economic behavior smacks of politicians trying to find yet another way to get deeper into your pockets.
That's just part of it; it's also a good way to cover up blunders. When asked by Congress (Greenspan admits ‘mistake’), "Greenspan said he had made a "mistake" in believing that banks in operating in their self-interest would be sufficient to protect their ..."
So Greenspan's saying the only thing he did wrong was underestimated the public's stupidity.