Alan Greenspan: ARMed and dangerous.

Commentary about business and finance.
Feb. 27 2004 4:47 PM

Alan Greenspan: ARMed and Dangerous

The Federal Reserve chairman's weird affection for adjustable-rate mortgages.

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Strictly speaking, Greenspan is correct. If you borrow money while interest rates are falling, then an ARM is superior to a fixed-rate mortgage. But while homeowners may pay a little less with an ARM, they may wind up sleeping less when rates climb again—as they inevitably do. Man does not live by basis points alone.

Daniel Gross is a longtime Slate contributor. His most recent book is Better, Stronger, Faster . Follow him on Twitter.