Terming the current financial crisis as 'once-in-a century credit tsunami' former Federal Reserve Chairman Alan Greenspan has said a significant rise in layoffs and unemployment is unavoidable.

"This crisis has turned out to be much broader than anything I could have imagined. It has morphed from one gripped by liquidity restraints to one in which fears of insolvency are now paramount," Greenspan said in a testimony before the US Committee of Government Oversight and Reform.

The former Fed chief said he had raised concerns as early as 2005, that the protracted period of underpricing of risk would have dire consequences. He added that it was the failure to properly price risky assets that precipitated the crisis.

However, sounding more optimistic he said, "The crisis will pass and America would re-emerge with a far sounder financial system." The financial landscape that would greet the end of the crisis would be far different from the one that was there a little more than a year ago, he said.

The Committee panel members questioned Greenspan for examining the causes of the current financial crisis and blamed him for his approach to mortgage regulation, while he was Fed Chairman.

According to Los Angeles Times, under tough questioning from the Committee Chairman Henry A Waxman and other Democrats, Greenspan conceded that he was wrong in assuming that free-market forces would prevent the current crisis. "I made a mistake in presuming that the self-interests of organisations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms," Greenspan as quoted as saying by the daily.