WASHINGTON — James Cayne, who led Bear Stearns for 15 years before its implosion, defended the conduct of the Wall Street firm against scepticism that uncontrollable outside forces were to blame.

The firm's stunning collapse in March 2008 "was due to overwhelming market forces that Bear Stearns . . . could not resist", Cayne testified yesterday at a hearing of the Financial Crisis Inquiry Commission.

Cayne, who was Bear Stearns' CEO until January 2008, and Alan Schwartz, who succeeded him for a few months, appeared before the congressionally-chartered commission. The panel is investigating the roots of the crisis that plunged the country into the most severe recession since the 1930s and brought losses of jobs and homes for millions of Americans.

"It does seem to me that there was an extraordinary level of risk taken" by Bear Stearns, panel chairman Phil Angelides told Cayne.

"That was the business. That was really industry practice," Cayne responded, while acknowledging that in hindsight the mounting debt levels taken on by the bank were excessively high.

Cayne said "we made a conscious decision" to move to using special loans from other investment banks, known as repurchase agreements, because it provided a better way to obtain financing in the credit crunch that crippled the commercial paper market.

Those "repo" loans grew to $50 billion to $60 billion overnight in the period before Bear Stearns failed.

Bear Stearns was the first Wall Street bank to blow up. It was caught in the credit crunch in early 2008 and foreshadowed the cascading financial meltdown in the fall of that year. The Federal Reserve orchestrated Bear Stearns rescue buyout by JPMorgan Chase & Co. with a $29 billion federal backstop.

The hearing marked Cayne's first public appearance in the aftermath of the crisis. He led an investment bank that was the smallest of the "Big Five" on Wall Street but was known for its go-against-the-grain scrappiness.

But his management style drew criticism. As two of Bear Stearns hedge funds were melting down in June 2007, Cayne reportedly managed to spend 10 of 21 workdays out of the office, taking a helicopter from Manhattan to New Jersey on Thursday afternoons for regular golf games and skipping work to play in bridge tournaments.

"The market's loss of confidence, even though it was unjustified and irrational, became a self-fulfilling prophecy," Cayne told the hearing.

"The efforts we made to strengthen the firm were reasonable and prudent, although in hindsight they proved inadequate," Cayne said.

"Considering the severity and unprecedented nature of the turmoil in the market, I do not believe there were any reasonable steps we could have taken, short of selling the firm, to prevent the collapse that ultimately occurred."