Panel hears from Bair and Holder

WASHINGTON, Jan. 14 (UPI) -- The chairwoman of the U.S. Federal Deposit Insurance Corp. told a congressional panel Thursday financial reforms needed to consider national priorities.

"This crisis represents the culmination of a decades-long process by which our national policies have distorted economic activity away from savings and toward consumption, away from investment in our industrial base and public infrastructure and toward housing, away from the real sectors of our economy and toward the financial sector," Chairman Sheila Bair told the Financial Crisis Inquiry Commission in Washington.

Bair questioned "the fundamental assumptions regarding financial supervision," The New York Times reported. With banks as big as they are, "we must reassess whether financial institutions can be properly managed … through existing mechanisms and techniques," she said.

In separate testimony, U.S. Attorney General Eric Holder Jr. said the Justice Department was doing what it could to crack down on fraud cases and instill confidence in the system. He pointed out some headline successes, including Bernard Madoff, who ran a giant Ponzi scheme and is now serving a 150-year prison sentence. The FBI is currently investigating about 2,800 mortgage fraud cases, he said.