WASHINGTON-With Election Day less than two weeks away, lawmakers returned to Washington to pepper financial regulatory officials with questions on the financial crisis. Some lawmakers condemn witnesses' policies of deregulation, and are putting free market ideology on trial.
Alan Greenspan, chair of the Federal Reserve Board prior to its current chair Ben Bernanke, and Neel Kashkari, who is overseeing the distribution of the economic rescue package, were among the Washington powerful who testified to House and Senate committees Thursday.
The witnesses at the House Oversight Committee spoke gloom and doom.
"I cannot see how we can avoid a significant rise in layoffs and unemployment," said Greenspan. The crisis, which he predicted will continue for many months at a minimum, put him in a "state of shocked disbelief," he said.
John Snow, Treasury secretary prior to Henry Paulson, said the country was on a "clear path" to slower, even negative growth.
Many lawmakers lay some of the blame for the financial crisis on Greenspan's anti-regulation approach in his term at the Federal Reserve.
The former chair confessed his shaken faith in free-market thinking.
"You had an ideology," said Rep. Henry Waxman, D-Calif., chair of the House Oversight Committee. "Do you feel that your ideology pushed you to make decisions that you wish you had not made?"
Greenspan argued having an ideology wasn't itself the problem.
"Everyone has one," he said. "The question is whether it is accurate or not. I'm saying, yes, I've found a flaw. I don't know how extensive or permanent it is."
"If the facts change, I will change," he added.
Republicans deflected discussions on the ills of deregulation, returning to the role of Fannie Mae and Freddie Mac in the crisis.
Rep Tom Davis, R-Va., called for the committee to explore Fannie and Freddie's role and avoid tangential hearings on corporate retreats and executive compensation, the topics of the last several congressional hearings.
"In this political season, the search for villains is understandable, and in some aspect healthy," he said. "[But] retribution needs to be tempered by wisdom."
In the Senate Banking Committee hearing, Chair Chris Dodd, D-Conn., called for swifter distribution of federal funds to banks, citing thousands of daily foreclosures.
"I'm not asking you to be lacking in prudence on this, but … we need to get moving," he said to the Treasury representative, Kashkari.
"We share your sense of urgency," Kashkari responded. He predicted that a second round of banks would have completed the legal work to receive funds within the next few weeks.
Democrats argued for more standards for the banks' use of federal funds, but Kashkari said the Treasury didn't want to begin "micromanaging" financial institutions.