WASHINGTON, DC — At this week's House Oversight and Government Reform Committee hearing, Congressman John F. Tierney (D-MA) made the following statement after questioning a panel of federal regulators, including former Federal Reserve Chairman, Alan Greenspan, current Securities and Exchange Commission (SEC) Chairman, Christopher Cox, and former Treasury Secretary, John Snow, about their role in the current financial crisis.

“Yesterday's hearing reinforced my concerns that Dr. Greenspan’s subscription to a reckless ideology of deregulation led him to avoid exercising authorities empowered to him by Congress to prohibit predatory lending practices. Despite the repeated urging of Democratic and Republican led Congresses, The Department of Housing and Urban Development, and voices from within the Federal Reserve itself, Dr. Greenspan stood aside while subprime lenders lured families into risky mortgages they could not afford. Dr. Greenspan himself acknowledged in yesterday’s hearing that subprime mortgages contributed to this crisis, and his testimony underscored the reality that he could have, and should have put his radical ideologies aside and put an end to predatory lending during his tenure. In light of these past failures, the hearings clearly make the case that it is now incumbent upon us to ensure new regulatory systems are explored and implemented.”

Earlier in the week, Tierney attended a hearing titled, “Credit Rating Agencies and the Financial Crisis.” This hearing examined the actions of the three largest credit rating agencies, Standard & Poor’s, Moody’s Corporation, and Fitch Ratings and how these actions contributed to the current financial crisis.

Tierney pressed the agency representatives saying, “Credit rating agencies should be the most important source of independent analysis and information about debt securities issued by governments, corporations, and other institutions. However, when it came to rating packages of risky “subprime” mortgage backed securities, apparently these “gatekeeper” agencies were asleep at the switch. Large baskets of these securities received a “AAA” rating, the industry’s gold-standard for credit-worthiness, and the same rating given to low-risk U.S. Treasury bonds. Yet the financial crisis has revealed that the quality of these mortgage backed securities was not nearly as sound as this “AAA” rating initially indicated. This systemic failing was the result of poor management, industry conflicts of interest, and – in numerous cases ? quite possibly outright fraud. What we do know is that these gatekeepers of the financial industry have now lost credibility and investors are hesitant to engage in the market. Congress, government agencies and financial institutions must now work cooperatively to restore lost confidence.”

In light of the dramatic events that have occurred in global financial markets, the Oversight Committee will continue holding hearings to examine the regulatory mistakes and financial excesses that led to the market breakdowns on Wall Street.