Despite stumbling before the financial crisis, Federal Reserve would get new discretion in Senate banking bill

WASHINGTON - As the financial system teetered on the brink of meltdown in the fall of 2008, then-Federal Reserve Chairman Alan Greenspan - known for years as "the Oracle" - admitted he had been blindsided by the housing crash and breakdown in the credit markets.

"This crisis ... has turned out to be much broader than anything I could have imagined," a chastened Greenspan testified before a House committee, which had summoned him to determine why one of the nation's key financial regulators had failed to see the dangers in the explosive growth in subprime lending.

Those stumbles by Greenspan, who had stepped down in 2006 after more than 18 years leading the central bank, and other Fed officials were a major reason Congress enacted the Dodd-Frank reform act. The