April 7, 2010 -- A bipartisan panel appointed by Congress to examine the causes of the financial meltdown today blamed former Federal Reserve Chairman Alan Greenspan for failing to address the problems regarding risky home loans that precipitated the recent crisis.
Members of the Financial Crisis Inquiry Commission, a 10-person panel assembled to report on the meltdown to President Obama later this year, said Greenspan's Fed should have done more to stop predatory subprime lending practices.
"Why, in the face of all that, did you not act to contain abusive, deceptive subprime lending?" asked the commission's chairman, Phil Angelides, a former state treasurer of California.
"My view is you could have, you should have, and you didn't," he told Greenspan.
Greenspan, who chaired the Fed from 1987 to 2006, replied that the central bank did take actions to crack down on the subprime problems, but said that the Fed only has rule-making power, not enforcement power.
"Would you put this all under the category of 'oops', you should have done it?" Angelides asked him.
In response, Greenspan acknowledged he made "an awful lot of mistakes" during his career. He said he was right about 70 percent of the time but wrong 30 percent of the time.
"Did we make mistakes? Of course we made mistakes," he said.
But trying to look back and assess what he should have done differently, Greenspan said, is "a futile activity."
Greenspan said Congress deserved part of the blame for the subprime mortgage crisis because lawmakers would have disapproved if the Fed had cracked down on subprime lending in the midst of a booming housing market.
"If the Fed as a regulator had tried to thwart what everyone perceived as a fairly broad consensus that the trend was in the right direction, homeownership was rising and that was an unmitigated good, then Congress would have clamped down on us," Greenspan said.
He added, "There's a lot of amnesia that's going on."
Greenspan was once regarded as a financial wizard but is now blamed by some for the crisis. In recent weeks he has publicly campaigned to restore his tarnished reputation.
In an interview with ABC News' Jake Tapper on "This Week," Greenspan said the financial world failed to put in place adequate protections for risk-taking gone wrong.
Alan Greenspan: We Made 'an Awful Lot of Mistakes'
"The major mistake was assuming what the nature of risk would be," Greenspan said. "And the reason it was missed is we have had no experience of the type of risks that arose following the default of Lehman Brothers in September 2008. That's the critical mistake. And I made it. Everybody that I know who works in this business made it."
"It means that basically we have to work our way back to understanding what went on," he stated. "And as I argue, what we need is far more required capital for financial institutions than we've had."
The financial commission has been tasked by Congress with examining the causes of the meltdown. The panel is set to deliver its report to the president and Congress by December 15, but that deadline, sources said, will be a tough one to meet.
A source familiar with the matter told ABC News that the panel feels good about the progress made thus far, but a great deal of work remains. One indication of the massive task that the commission faces is that, to date, the panel has received over 500,000 documents comprising over two million pages. Not making matters any easier for the panel is its bipartisan structure: six of the ten members were appointed by Democrats, four by Republicans.
In addition, the panel's influence on Wall Street reforms could be minimal. Congress is already pushing ahead with bills to enact the biggest overhaul of Wall Street regulations since the Great Depression. The House of Representatives passed its reform bill late last year and the Senate is poised to take up its reform measure in the coming weeks. A final bill is expected to emerge within months.
On Thursday the commission will hear from Citigroup's former CEO Chuck Prince and former board chairman -- and former Treasury Secretary -- Robert Rubin as part of an examination of the bailed-out banks' mistakes. In the week's final hearing on Friday the panel will summon a handful of officials from government-backed mortgage giant Fannie Mae, including CEO Daniel Mudd.