For starters, FDIC Chairman Sheila Bair testified that the credit-default swaps market still poses a systemic threat and that even she can't access CDS information to accurately assess financial institutions' exposure.
Bair and SEC Chairman Mary Schapiro were in agreement with Commission Chair Phil Angelides' assessment that the credit rating agencies were "proved to be worthless and remain so today," given that they are paid by the very Wall Street firms who are profiting from AAA-rated securitized assets.
State Attorneys General Lisa Madigan of Illinois and John Suthers of Colorado revealed that not only were their warnings about unscrupulous and predatory lending practices ignored, but that their investigations were actively thwarted by federal regulators who in turn did nothing--under the guise of preemption.
Madigan also described how rate sheets reveal that Wall Street paid mortgage brokers and loan officers more for risky mortgages--with low teaser rates, pre-payment penalties, low- or no documentation--because the consequent higher interest rate paid by the borrower would bring in more income. Wall Street wasn't the victim of bad underwriting that it claims to be; indeed it incentivized it. . .
Schapiro, Bair, and Madigan argued that Wall Street should have "skin in the game" when securitizing assets. As things stand now they sell them with a bought and paid for AAA-rating, and then take their profits even if the underlying assets are worthless. . .
Reforms discussed included a systemic risk council, a consumer financial protection agency, an industry-funded mechanism so that large firms can be broken up and sold off without taxpayer money, greater disclosure of compensation structures, and a single clearinghouse for derivatives like credit-default swaps.