John Allison

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."

Instead, BB&T CEO John Allison pointed the finger at government creations like the Securities and Exchange Commission (SEC), Federal Deposit Insurance Corporation (FDIC) and Fannie Mae and Freddie Mac, the two government-sponsored enterprises that failed last year. Allison was giving a lecture in Washington, D.C. Jan. 29 for the Ayn Rand Center for Individual Rights.

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.