Frank Partnoy, a panelist from the University of San Diego, claims that "the balance sheets of most Wall Street banks are fiction." Another panelist, Raj Date of the Cambridge Winter Center for Financial Institutions Policy, argues that government-backed mortgage giants Fannie Mae and Freddie Mac have become "needlessly complex and irretrievably flawed" and should be eliminated. The report also calls for greater competition among credit rating agencies and increased regulation of the derivatives market, including requiring that credit-default swaps be traded on regulated exchanges.
With the Senate Banking Committee, led by Chris Dodd, D-Conn., poised to unveil its financial regulatory reform proposal sometime in the next week, the report calls on Congress to enact reforms strong enough to prevent another meltdown.
"Sen. Dick Durbin once said the banks 'owned' the Senate," says Johnson. "The next few weeks will determine whether or not that statement is true."
In response to the report, a spokesman for the Treasury Department told ABC News that the administration's regulatory reform proposals would be the most significant Wall Street overhaul in generations.
"We laid out our strong principles of reform last June and we have been fighting every day since to see them enacted in law," said Treasury spokesman Andrew Williams. "While we have a tough fight ahead, we are getting close to seeing Congress pass the most significant overhaul of the financial sector in our lifetimes."