NEW YORK (Reuters) - Paul Volcker, a former head of the U.S. Federal Reserve, said the financial crisis was not finished yet despite drastic actions from the central bank that are broadening its role in managing the economy.In an interview with Charlie Rose on PBS television late Tuesday, Volcker said the country's troubles are the inevitable consequence of a bubble in housing that was clearly unsustainable."I don't think this crisis is over," he said. "It's quite a serious matter. We have seen the Federal Reserve take more extreme measures in some respects than any that have been taken in the past to deal with a financial crisis, which raises some real questions."The Fed has pumped over half a trillion dollars into the financial system, boosted its emergency lending facilities, and pledged to take on some of the mortgage debt ravaging banks' balance sheets and causing billions in losses.These events led to an investor-led run on the bank over the weekend that left Bear Stearns all but stripped of liquid assets.The Fed, sensing a broader risk, stepped in to broker a buyout of the bank by larger rival J.P. Morgan, a move that Volcker said calls for greater regulatory oversight of investment firms like Bear."That is a new precedent," Volcker said. "Whether it's wise or not depended on how severe this crisis was and their judgment about the threat of the demise of Bear Stearns. That's a judgment they had to make, and an understandable judgment.""If we are going to lend to them, one of the questions that arises over what happened, if we are going to lend to them and protect them, shouldn't they be regulated? I think the answer... (is) yes."(Writing by Pedro Nicolaci da Costa, Editing by Chizu Nomiyama)
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