WASHINGTON (AP) — The head of the governments $700 billion financial
rescue program told Congress Thursday that the Bush administration has
made "tremendous progress" in pushing to get it implemented.


Neel
Kashkari, a Treasury Department official who is interim head of the
program, told the Senate Banking Committee in prepared testimony that
since last weeks announcement that the government would spend $250
billion to buy bank stocks to bolster capital reserves, there has been
"numerous signs of improvement in our markets and in the confidence in
our financial institutions."

Separately, former Federal Reserve
Chairman Alan Greenspan told another congressional panel that the
current global financial crisis is a "once in a century credit tsunami"
that policymakers did not anticipate.

Although some critics have
blamed Greenspan for contributing to the current crisis by leaving
interest rates too low for too long, he put the blame on soaring
mortgage foreclosures on overeager investors who did not properly take
into account the threats that would be posed once home prices stopped
surging upward.

Greenspan was the leadoff witness before the
House Government Oversight and Reform Committee, a hearing that
lawmakers called to question past key financial players about what they
felt caused the most grave financial crisis since the 1930s. The
witnesses were also expected to be asked how they thought the
government would deliver the nation from the economic turmoil.

Committee
Chairman Henry Waxman, D-Calif., suggested that Greenspan contributed
to "irresponsible lending practices" by rejecting appeals that the Fed
intervene to regulate a surging subprime mortgage industry.

"The list of regulatory mistakes and misjudgments is long," Waxman said of oversight by the Fed and other federal regulators.

The
financial crisis was the subject of simultaneous hearings in both the
House and the Senate, where most lawmakers are in the middle of their
Election Year break.

Kashkari, in his Senate testimony, cautioned
that "while there have been recent positive developments, the markets
remain fragile."

Another witness before the Senate panel, Sheila
Bair, head of the Federal Deposit Insurance Corp., said the government
can use its new authority from Congress to directly help struggling
homeowners to overhaul mortgages by giving banks an incentive to modify
the loans.

Bair has been urging that the government do more to
help tens of thousands of home borrowers avert foreclosure. She
suggested in prepared testimony that could be done by having the
government set standards for modifying mortgages into more affordable
loans and providing loan guarantees to banks and other mortgage
services that meet them.

The federal regulators — past and
present — testified as the Bush administration weighed how to carry
out a provision of the $700 billion bailout passed by Congress earlier
this month to help financially strapped homeowners renegotiate more
affordable loans and avoid foreclosure.

The new law includes
several provisions to encourage mortgage revisions for homeowners in
difficulty, Bair noted in her testimony. They give the Treasury
Department authority to use loan guarantees and credit enhancements to
promote modifications of mortgages to make them more affordable.

"Loan
guarantees could be used as an incentive for servicers to modify
loans," Bair said in her prepared testimony. "By doing so, unaffordable
loans could be converted into loans that are sustainable over the long
term."

The FDIC is working "closely and creatively" with the Treasury Department on such a plan, she said.