WASHINGTON (Reuters) - George Soros, chairman of Soros Fund Management, testified at a House Oversight and Government Reform Committee hearing on Thursday. Highlights:

* Said “a deep recession is now inevitable and the possibility of a depression cannot be ruled out.”

* Said hedge funds were an integral part of the financial market bubble which now has burst.

* Said hedge funds will be “decimated” by the current financial crisis and forced to shrink their portfolios by 50-75 percent.

* Said Fed, Treasury Department and the SEC must accept responsibility to prevent market bubbles from growing too big in future.

Said impossible to prevent market bubbles from forming, but they can be kept within “tolerable bounds.”

* Said financial engineering should be regulated and new products approved by regulators, and that such regulation should be a high priority of the new Obama administration.

* Said a recent IMF credit facility not large enough to stabilize markets.