Allison cautions that there is a flip side to the opportunity created by competitors' troubles.

"Even among our client base we're getting a lot more questions about us because they've heard about BofA and Wachovia," he adds. "So even though we're picking up business, which in some ways is healthy, if you gave me a preference, I wish they were in better shape."

Housing Must Be Addressed

Allison says the government's priority right now should be to stabilize home prices, because once the housing market bottoms, "the economy will follow it soon."

He suggests that the government offer homebuyers a 10% tax credit to encourage consumers to purchase homes that are already built or in the process of being built in order to clear the excessive inventory. The tax credit would "create a floor on the housing market," he says.

"That's very important ... to the capital markets," he says. "... So even if it meant house prices were going to go down another 10%, but you knew that's where they were going to stop, then you could re-price the capital markets and value all this stuff."

Allison says the roots of this downturn were laid out by years of easy credit and misguided policies from the Fed and Republican and Democratic administrations.

For one, the aggressively low interest-rate management by former Fed Alan Greenspan created the "illusion of low risk" in the economy that caused consumers and investors to "save less" and "make more risky investments," he says. From the early 1990s through 2007, "we didn't have a meaningful correction," he says.

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