Former Federal Reserve Chairman Alan Greenspan went before a House oversight committee Thursday morning and said he was shocked at the breakdown of the financial system.
He also predicted the economy will worsen in the coming months.
Greenspan, testified about the sub prime mortgage and credit crisis.
The former Federal Reserve Chairman said the financial damage caused by failed mortgage backed securities has created a domino effect even he could not have predicted.
"Fearful American households are attempting to adjust, as best they can to a rapid contraction in credit availability, threats to retirement funds, and increased job insecurity," said Greenspan.
The weekly snapshot of jobless claims, up by 15,000 shows layoffs are coming at a faster pace than expected.
From pharmaceutical companies like Merck slashing more than 7000 jobs, and tech giant Yahoo's 1,500 layoffs to word that General Motors will make involuntary cuts in its salaried and contract workforce.
Across the board job losses not seen since in more than three decades.
You haven't seen anything yet in terms of job losses," said economist Lakshuman Achutan.
Greenspan's testimony comes one day after CEO's from the top credit rating agencies went before the committee.
"It is clear that many of our structured-finance rating opinions have not performed well," said republican congressman Mark Souder of Indiana.
The agencies entrusted with protecting investments are accused of offering gold standard ratings to investments they realized included risky sub prime loans.
"You are the gatekeepers! You're the guys. You're the ones that make all the money Now we face a situation where we've got a house of cards that has fallen. You want to comment? Anybody?" asked democratic congressman Elijah Cummings of Maryland.