Alan Greenspan spoke at the Brookings Institution on Friday.  The former Federal Reserve chair delivered a paper on the root causes of the financial crisis, and argued that monetary policy was not the cause.  He defended the Fed's decision to keep the short-term interest rate low in during the height of the housing bubble:

The funds rate was lowered from 6½% in early 2001 to 1¾% in late 2001, and then eventually to 1% in mid-2003, a rate that held for a year. The Federal Reserve viewed the 1% rate as an act of insurance against the falling rate of inflation in 2003 that had characteristics similar to the Japanese deflation of the 1990’s. The Fed thought the probability of deflation small, but the consequences, should it occur, dangerous. But we recognized that a funds rate held too low for too long might encourage product price inflation. I thought at the time that the rate decrease nonetheless reflected an appropriate balancing of risks. I still do.

To my knowledge, that lowering of the federal funds rate nearly a decade ago was not considered a key factor in the housing bubble. Indeed, as late as January 2006, Milton Friedman, historically the Federal Reserve’s severest critic, in evaluating the period of 1987 to 2005, wrote, “There is no other period of comparable length in which  the Federal Reserve System has performed so well. It is more than a difference of degree; it approaches a difference of kind.”

Read Greenspan's paper, The Crisis, here.