The chief executive of one of America’s biggest banks admitted that Wall Street could not be trusted to do the right thing and needed tougher regulation.

John Mack, who will retire as head of Morgan Stanley at the end of this year but stay on as chairman, said that the Federal Reserve had already stepped up its regulation of the bank since last year’s financial crisis.

Speaking at a Bloomberg/Vanity Fair discussion last night, Mr Mack said that Morgan Stanley had “15 to 20 Fed regulators in our building 24 hours a day”.

“They test our models, they question everything we do,” he said during the panel discussion. “I’ve never been regulated like that before. It’s a different environment. Someone said to me ‘What do you think of it?’. I love it.”

Mr Mack said that regulators should have been more aggressive in the lead-up to last year’s financial crisis, which was caused by banks and other financial groups’ underestimating the risks posed by some loans and securities based on the loans.

The Morgan Stanley boss went on to describe how he phoned regulators during the credit boom, when banks were competing to provide loans for highly leveraged acquisitions, and asked the watchdogs to step in.

He said that he told the unnamed regulators that he had just lost business to a competitor because they trumped his offer of eight times’ leverage for a deal.

Mr Mack recounted his conversation with the regulators: “I missed a piece of business. I can live with that but as soon as I hung up the phone someone else put up ten times’ leverage. We cannot control ourselves. You have to step in and control the Street.”

Mr Mack famously told then-Federal Reserve Bank of New York president Timothy Geithner to “get f*****" as tensions rose over Morgan Stanley’s survival last year.

The bank ended up receiving a $10 billion bailout from the Government, which it has since repaid.

Mr Geithner, who is now Treasury Secretary, used a hearing of Congress’s Joint Economic Committee today to urge lawmakers to pass legislation as quickly as possible that would introduce a new system of financial regulation.

He said that regulators were forced to respond to last year’s financial crisis with “duct tape and string”.

"Nobody in my job should ever be in the position again of having to come into a crisis like this without … basic authorities," he said.

Both House and Senate committees have produced proposals that would revamp the regulatory landscape but significant differences between the two bills could slow down the production of legislation.

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