"We are in the midst of the worst financial crisis since the 1930's," Soros told members of the House Committee on Oversight and Government Reform Committee.
He added that "excessive deregulation is at the root of the current crisis," warning that there is a danger that lawmakers might now seek to over-regulate the markets.
"There's a real danger that the pendulum will swing too far the together way," he said. "That would be unfortunate because regulations are liable to be even more deficient than the market mechanism itself. That's because regulators are not only human but also bureaucratic and susceptible to political influences."
As for hedge funds, he said they were an "integral part of the bubble which has now burst." He said hedge funds will likely be decimated by the economic crisis.
"I would guess that the amount of money they manage will shrink between 50 and 75 percent," he said. "It would be a grave mistake to add to the forced liquidation current depressing markets by ill-considered or punitive regulations."
Celebrity Families of 2014 [PHOTOS]