Opaque financial instruments in the U.S. have created an ``unprecedented'' financial crisis that needs to be repaired by rebuilding the banking system, said former Federal Reserve Chairman Paul Volcker.
``We are really going to have to rebuild this system from the ground up,'' Volcker said during the Columbia University's Women's Economic Round Table today in New York. ``The system is rebuilding itself.''
Volcker was joined by Joseph Stiglitz and Robert Mundell, both Nobel Laureates in economics teaching at Columbia, in discussing the problems plaguing the U.S. and global economies. The Fed has committed to pumping billions into the financial system after credit markets froze following the collapse of Lehman Brothers Holdings Inc.
The creation of complex financial products, ``instead of spreading the risk and creating transparency,'' wound up concentrating risk and ``opaqueness,'' Volcker said.
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