One bank executive is accusing Congress of going too far in regulating banks but not going far enough in taking on the credit rating agencies, as well as Fannie Mae and Freddie Mac.
During a recent regulatory symposium sponsored by American Banker, Buffalo-based M&T Bank Chairman and CEO Robert Wilmer predicted that the Dodd- Frank Act will not hit its goal of preventing another financial crisis, according to IStockAnalyst.com.
"Even as an excessive bureaucracy has been created with little thought as to the consequences involved for the taxpayer and the economy, the problems associated with these players persist," Wilmers said, IstockAnalyst.com reports.
Wilmers said Congress has done nothing to encourage competition among Moody’s, Fitch and Standard & Poor’s.
"We cannot allow a group of organizations which have gotten so many important things so wrong for so long – including assessments of municipal debt, the likelihood of major corporate bankruptcies, and, of course, the value of subprime mortgage-backed securities – to continue unchallenged," Wilmers said, according to IstockAnalyst.com.
Wilmers said Congress’ lack of control over these agencies allowed Standard & Poor’s to act as a political pundit when it lowered its ratings on U.S. Treasury bonds in retaliation to the government’s efforts to reduce the federal deficit.
Fannie Mae and Freddie Mac both remained untouched by Congress, which Wilmers said will prolong the U.S. housing market crisis.
"Despite the enormity of the problem, no action has been taken to resolve the question of how to restructure Fannie Mae and Freddie Mac so as best to serve the private housing market without exposing taxpayers to yet more risk," Wilmers said, IstockAnalyst.com reports.