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Former Federal Reserve Chairman Alan Greenspan said the worst of the credit crisis will pass once investors “fully'' anticipate the likely losses on securities tied to subprime and other mortgages, where defaults have surged.

“The worst of the credit crisis is over if we assume that current market prices for subprime and Alt-A securities have fully discounted the ultimate losses that will emerge,'' Greenspan said in remarks distributed by his office today.

Delinquencies have climbed among borrowers with subprime or Alt-A mortgages, designed for those with poor or limited credit histories, causing more than $323 billion of writedowns and losses since January 2007. Greenspan said the value of mortgage- backed debt ultimately depends on how much equity homeowners have in their houses, making the outlook for property prices critical.

“House prices still have a long way to fall,'' Greenspan said. “It is possible, but unlikely they will stabilize by year- end.''

Home prices in 20 U.S. cities fell in February by the most on record, the Standard & Poor's/Case-Shiller home price index showed on April 29. The measure dropped 12.7 percent from the same month last year.

New York Conference

Greenspan made the remarks on the credit crisis to the Alternative Public Strategies Conference in New York yesterday, according to Lisa Panasiti, his spokeswoman in Washington cash advance loans quick payday loan. Reporters were allowed to listen to the speech yesterday only on condition the remarks not be reported.

The former Fed chairman's office distributed the remarks today after Reuters reported yesterday that he said the worst of the credit crisis was over, citing unidentified people who attended the New York event.

Greenspan said in an interview last week that the economy is in a “tug-of-war'' between the financial crisis and relative stability among non-financial firms that are flush with cash. He judged that the U.S. has slipped into an “awfully pale recession.''

Economists anticipate the economy will grow at a 0.1 percent annual rate from April to June, the least since the 2001 recession, according to a monthly survey by Bloomberg News published today. Gross domestic product rose at a 0.6 percent pace in both the first quarter and the final three months of 2007.

Greenspan, 82, served as Fed chairman from August 1987 to January 2006. Since then, he has given regular speeches, written a bestselling book and begun advising clients including Deutsche Bank AG. The paperback version of “The Age of Turbulence,'' including a new chapter on the credit crisis, is scheduled for publication in August.

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