Former Federal Reserve Chairman Alan Greenspan said the US is “nowhere near the bottom” of the housing slump and is “right on the brink” of a recession.

In an exclusive interview on CNBC, Greenspan said the US economy is holding up “rather well” considering the “extraordinary pressures from the financial sector.” But he added that a recession appears inevitable.

Credit Crisis One Year Later: Winners and Losers

Wall Street Veteran: Fed's Actions Are a "Band-Aid"

“I think we’re right on the brink,” he said. “I’d be more surprised if we didn’t than if we did, given the financial state.”

Greenspan's remarks, which came shortly after 3 pm, helped accelerate the stock market's slide, with the Dow Jones Industrial Average closing down over 200 points.

Greenspan said the government "had no choice" but to step in and prevent the failure of Bear Stearns and mortgage giants Fannie Mae [ FNM 0.532  +0.0020 (+0.38%) ] and Freddie Mac [ FRE 2.93  +0.02 (+0.69%) ].

"You have to do the backstop," he said. "Because once you're at that particular point, your choices are limited."

More Top Stories

Analysis: What Will Prod the US Fed Into Action?

IMF's Lipsky Says Moderate World Recovery Underway

Oracle offered job to ex-HP CEO Hurd says source

Obama says his economic policies halted "bleeding"

Many Happy Returns: 5 Dividend Stocks for Retirees

More Top Stories