The former chairman of the Federal Reserve, Alan Greenspan, said the financial crisis that began with the collapse of the subprime-mortgage market last year “is probably a once in a century event” that will lead to the failure of more firms.

“There’s no question that this is in the process of outstripping anything I’ve seen, and it is still not resolved,” Mr. Greenspan said in an interview today on ABC’s “This Week with George Stephanopoulos.” Mr. Greenspan, 82, retired from the Fed in January 2006 after serving for 18 years as chairman.

Treasury and Federal Reserve officials are working on a sale of Lehman Brothers Holdings Inc., the 158-year-old investment bank that reported a third-quarter loss of $3.9 billion. Treasury Secretary Paulson, who spearheaded a government takeover of mortgage giants Fannie Mae and Freddie Mac last weekend, has said he’s reluctant to use Federal funds to rescue Lehman.

“What they are trying to do with Lehman is find a way in which there is no government money involved in this particular set of negotiations,” Mr. Greenspan said. “If they can’t, they have to make a very key decision as to whether they allow it to liquidate or support it,” he said, adding that he doesn’t know enough details to recommend the right move.

In March, the Federal Reserve took on a $29 billion portfolio of mortgage-backed debt and other assets when it brokered the sale of Bear Stearns Cos. to JPMorgan Chase & Co. It also opened up cash loans to investment banks, a safety net unavailable to Bear Stearns.