Former Federal Reserve chairman Alan Greenspan said he was "partially" wrong to advocate deregulation of the banking system after admitting to Congress that the severity of the current crisis had left him in a state of "shocked disbelief".
Speaking before a Congressional committee, the man hailed as an economic sage over the years warned that the system faces a "once-in-a-century credit tsunami".
His comments came as markets in Asia and Europe suffered sharp declines as investors fled over increasing fears of a global recession.
In Japan, the Nikkei fell 9.6 per cent to close at its lowest level in five-and-a-half years.
European exchanges fared little better in early trading with figures from the BBC showing London's FTSE 100 down by over six percent, the Cac 40 in Paris down by 7.06 percent and the DAX in Frankfurt down 7.14 percent.
Back on the Hill, Mr Greenspan commented that despite the system working "exceptionally well" for 40 years: "I made a mistake in presuming that the self-interest of organizations, specifically banks, is such that they were best capable of protecting shareholders and equity in the firms."
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