Washington - Former US Federal Reserve chairman Alan Greenspan warned that a "significant rise" in unemployment was unavoidable as the United States works its way through a massive financial crisis that will not ease up for many months.

"We are in the midst of a once in a century credit tsunami," Greenspan said in prepared remarks before the Oversight Committee of the US House of Representatives.

The drop in housing prices, which precipitated the crisis and sparked a record number of home foreclosures, will not stabilize until "many months in the future," he said.

Only then will investors gripped by fear of a protracted recession in the United States begin to significantly reinvest in the stock market, Greenspan said. He backed the
700-billion-dollar rescue package, which allows the government to invest public money in banks to free up credit.

Greenspan, who headed the US central bank from 1987 to 2006, presided over much of the excess lending and expansion of the subprime mortgage market in the US that prompted the current crisis.

His testimony was part of a series of hearings held by Congress in the past weeks, grilling financial executives and regulators in an effort to get at the heart of the credit crisis and what legislation will be needed to prevent a similar collapse in future. (dpa)