Former Federal Deposit Insurance Corp. chairman William Isaac told Newsmax-TV that the U.S. needs smarter, nonpolitical financial regulation since the Dodd-Frank rules are unable to prevent banks from engaging in reckless behavior.

Isaac argues U.S. policymakers struggle to enact rules that curve risks while ensuring they do not damper the economic recovery.

"These incidents are happening too often and we need much more effective regulation. We also need more marketplace discipline," Isaac told Newsmax.

He said one solution would be requiring big banks to issue long-term senior and subordinated debt regularly.

"That will force them to go into the marketplace and justify to very sophisticated debt investors who have nothing to gain from the risks these banks are taking, they just want their money back with interest, they will have to go into the marketplace on a regular basis and convince these people that they’re doing the right things with the bank," Isaac suggested.

Click here to view the interview.