Goldman Sachs chief executive officer Lloyd Blankfein said on Tuesday that the root causes of the nation's recent financial crisis was due to a sustained period of cheap credit and excess liquidity.

Blankfein noted that enormous flows of foreign capital from emerging markets, particularly from China, led to nearly 10 years of extremely low interest rate in the US, he said. Blankfein was testifying in Washington today before a specially convened panel of lawmakers known as The Financial Crisis Inquiry Commission.

This, combined with the US government's role in supporting and subsidizing homeownership, contributed to a residential housing bubble, he added

Blankfein also stated in the testimony that for financial institutions,  the vast majority of the losses can be traced to bad credit decisions in general, and most of those can be traced back to bad real estate loans.

He blamed Wall Street for a systemic lack of skepticism and outsourcing risk management by relying too much on rating agencies.  

Blankfein referred to the financial crisis as the 100-year storm and cautioned policy makers against extreme reform measures that would eliminate risk to the detriment of economic growth.