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US Congress Seeks Causes, Solutions to Global Financial Problems

Members of the U.S. Congress are holding hearings to find out what went wrong with the financial system and how to prevent such economic problems in the future.

A House committee, Oversight and Government Reform, is questioning officials of the companies that gave favorable evaluations to thousands of investments, only to see the value of these securities collapse later. Committee Chairman Henry Waxman called the rating agencies a "colossal failure."

Waxman argues that inflated ratings played a role in the financial crisis by encouraging investors to put money into weak securities.

Critics say ratings agencies wanted more business, and so they tended to give overly optimistic ratings.

Reform advocates say this conflict of interest would be avoided if rating agencies were paid by investors who are thinking about buying a security, rather than the company that issued the security.

More hearings are scheduled, including one that will look into the conduct of officials charged with overseeing the financial system like the former head of the Federal Reserve Alan Greenspan, former Treasury Secretary John Snow, and current Chairman of the Securities and Exchange Commission, Christopher Cox.