U.S. Rep. Paul Kanjorski says the Madoff scandal is a case study in why the U.S. financial system - from equities to bonds to insurance - needs to be reregulated.

The Northeastern Pennsylvania Democrat, who survived an election battle last month that threatened to end his 24-year career in Congress, now finds himself closely involved in the biggest story in America.

As chairman of the House Financial Services subcommittee on capital markets, Kanjorski will hold a series of hearings starting in the new year on how federal regulators missed the $50 billion Ponzi scheme put together over years by the financier Bernard Madoff.

He said the hearings would lead to recommendations on ways to change the financial system that he hopes will be voted into law in 2010.

"How did this happen?" he asked yesterday from his office in Wilkes-Barre. "Nobody saw it, and nobody took action."

"We are going to be testing all of the regulations of the last 75 to 80 years," he said. "We were going to do this before the Madoff thing occurred. But Madoff now gives us a great case study."

Kanjorski said a day of hearings would be scheduled early next month featuring testimony from officials of the Securities and Exchange Commission and university economists.

After that, hearings will be held periodically. No dates have been announced.

He said it was unlikely that Madoff would be called, "at least not initially." He said he did not want to interfere with the government's criminal case against Madoff.

But he said that some of the bankers who placed hundreds of millions of dollars with Madoff without adequately tracking how he was investing them may be called to testify.

The subcommittee, which has three staff members, does not intend to do a fact-finding investigation behind the scenes, he said.

"I don't think there is going to be a big dispute here about the facts," he said. "The question is, why didn't somebody act to take some sort of corrective action?"