October 9, 2012

Isaac, point-man on bank crises, speaks to Fisher students

Former FDIC Chair William Isaac

When the nation’s two largest financial disasters hit, more than two decades a part, there was one person who became the go-to-man:  William Isaac.

Isaac was the chairman of the Federal Deposit Insurance Corporation during the 1980s savings and loan failures, which was compounded by serious inflation. Isaac shared his recollections and lessons learned from the 1980s and 2008 banking crisis as a Distinguished Guest Speaker at Fisher before a capacity audience of Fisher graduate students and Moritz law students on Oct. 4.

As head of the FDIC, he was appointed to several federal task forces, worked closely with bank executives and government officials to help shepherd the industry through a tumultuous time as thousands of banks and thrifts failed. Isaac recalled weekend calls during family backyard gatherings from troubled bank officials when another institution folded.

“That was when cell phones were this big,” Isaac outstretched his hands to gesture the size of the large and bulky cell phones of the 1980s.


It was déjà vu. Or as Isaac called it in the second section of his book, “Senseless Panic: How Washington Failed America,” it was “Here We Go Again.” Bear Stearns had to be rescued by JPMorgan Chase and then the collapse of Lehman Brothers.

By then, Isaac had long left the federal government and was comfortably enjoying a new career in the private sector. 
But he decided to step into the fray. Isaac, the founder of a financial consulting firm Secura Group, decided to join the conversation by penning an articles for national newspapers such as the, The Wall Street Journal and The Washington Post.

“I was strongly opposed to TARP,” Isaac recalled about the Troubled Asset Relief Program. TARP authorized the government to purchase assets and equity from troubled financial institutions. Isaac articles and editorials drew comparisons to the 1980s banking crisis and other strategies for reform.

One very powerful segment of The Washington Post’s audience began to pay attention: members of Congress.

“My phone didn’t stop ringing and it came from all sides, liberals, conservatives, Democrats and Republicans, who like me, wanted to stop TARP,” Isaac said. “I had plans one Sunday to take my family to see Tampa Bay against the Packers.”

Once again, family and weekend plans were interrupted.

He joined the movement to stop the legislation with an unlikely coalition of diverse congressional members.  Although it was eventually signed into law by U.S. President George Bush in October 2008, the coalition successfully stopped an earlier version of TARP legislation.

“I will never forget one meeting in particular,” Isaac said. “There were some of the most liberal members of Congress, Dennis Kucinich, Jesse Jackson Jr. and Maxine Waters were sitting on either side of me and directly across the table there were conservative Republicans. It was amazing.”