While countries like China, Brazil and India are on the path to ascendency, the United States appears to be heading in the opposite direction, according to the former CEO of a major U.S. bank.
In a segment on the Jan. 7 broadcast of the Fox Business Channel's "Stossel," John Allison, the former CEO of North Carolina-based BB&T Corporation (NYSE:BBT), the 10th largest bank in the United States, warned of dark times ahead if the country continues on its current course.
"Now, it's a long-term trend," Allison said. "We will have some kind of economic recovery and we'll have some economic growth. I think the most likely intermediate scenario is stagflation like the 1970s."
Allison cited a "religious belief in affordable housing" that led the government to institute the Community Reinvestment Act of 1977 (CRA) and later, during the Clinton years, to a huge expansion of Fannie and Freddie.
"In my opinion, I'm certain without Freddie Mac and Fannie Mae we could not have had the magnitude of misinvestment - we'd a had misinvestment but nothing like what we've had today," Allison said.