Former Federal Reserve Chairman Paul Volcker denies that the high interest rates he encouraged in the early 1980s spawned the problems of the savings-and-loan industry later in the decade.

Volcker, appearing Wednesday before the House Banking Committee, said the industry's ill-advised excursion into risky investments, not the highest interest rates since the Civil War, proved its downfall."The industry could have survived that episode (of high interest rates) and the great bulk of it did," he said.

As head of the nation's central bank from 1979 to 1987, Volcker quelled the double-digit inflation of the 1970s by drastically slowing the economy with interest rates topping 20 percent.

"It was very painful, but I don't think it was the fundamental cause of what was happening in the late 1980s," he said at the second of a series of hearing exploring the roots of the S&L mess.

Banking Committee Chairman Henry B. Gonzalez, D-Texas, who once sought to impeach Volcker for his monetary policy, agreed that interest rates weren't the fundamental cause, but he said they were a contributor.

Volcker primarily blamed the losses on the expansion of S&Ls into investments outside their traditional role of mortgage lending and serving family financial needs, and on the inability of inexperienced S&L examiners to monitor the new business.