Greenspan warns govts may have to bail out more banks

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LONDON, Aug 5 (AFP): Former US Federal Reserve chairman Alan Greenspan warned today that governments the world over may have to bail out more banks before the current financial crisis is over.

Writing in the Financial Times, Greenspan also warned of the "awesome cost" of a move towards protectionism by governments, arguing that globalisation was "at the root" of economic growth around the world over the past decade.

"Fears of insolvency have not, as yet, been fully set aside," Greenspan wrote.

"There may be numbers of banks and other financial institutions that, at the edge of defaulting, will end up being bailed out by governments."

British mortgage lender Northern Rock and American bank Bear Stearns both averted bankruptcy over the past year when they were given backing to varying degrees by their respective governments. Greenspan also extolled the virtues of globalisation, describing it as having been "at the root of the past decade's unprecedented surge in world economic activity."