Top regulators to face US financial crisis panel

In testimony that urged stricter oversight in future while admitting past errors, Federal Deposit Insurance Corp Chairman Sheila Bair headlined the second public hearing of Congress' Financial Crisis Inquiry Commission.

"Not only did market discipline fail to prevent the excesses of the last few years, but the regulatory system also failed in its responsibilities," she said.

"Record profitability within the financial services industry also served to shield it from some forms of regulatory second-guessing," Bair told the commission.

The 10-member panel, in its first public hearing on Wednesday, heard a tale of misjudgments and regret from top banking executives, but got no outright apology or any new explanations for the debacle that shook world markets.

The bankers acknowledged taking on too much risk and having choked on their own financial cooking in the subprime mortgage market, but they defended their pay packages and the huge size of their businesses in the face of proposals to break them up.

On Thursday, in addition to Bair, the commission heard from Securities and Exchange Commission Chairman Mary Schapiro, who said the SEC is reviewing investment bank practices in markets for subprime mortgage-backed securities and collateralized debt obligations during the real estate bubble before the crisis.


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