FIVE years after the United States financial collapse, a former American bank regulator said the banking system remains fragile despite there being more capital in the banks.
Former Federal Deposit Insurance Corporation chairman Sheila C. Bair said yesterday the US was still struggling with "past mistakes" and its aggressive monetary policies.
"We are on an unsustainable fiscal path and we have a dysfunctional political system that is not dealing with it," she told a session on "Shifting Gears and Accepting Accountability" at the World Capital Markets Symposium yesterday.
Bair said in the lead-up to the crisis, there were three things that the US should have not done but proceeded to do.
"One was mortgage-lending standards; we needed to have mortgage-lending standards.
"We also had this huge unregulated derivatives market and capital standards were getting weaker and weaker," she added.
Stating that while some major steps have been taken to address weaknesses revealed by the financial crisis, more remains to be done.
This includes compensation reform for the banking sector and improving disclosure on gross exposure of big banks, she added.
"There appears to be not enough done to avert another financial crisis, which was caused by both loose monetary and regulatory policies.
"There is now a need to work constructively with the regulators to find a policy that serves both the share-holders and the economy well," said Bair.