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Senseless Panic is a provocative, quick-paced, and thoughtful analysis of what went wrong with the nation’s banking system and a blunt indictment of United States policy.

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For decades, William Isaac’s insights on the U.S. financial system have been featured in leading news publications. Now, you can browse them all in one location.


in leading business publications
GOVERNMENT DID NOT SAVE THE ECONOMY By Brian Wesbury First Trust Portfolios Posted: Oct 21, 2015

Brian Wesbury of First Trust Portfolios offers an interesting and spot on assessment of the government’s mishandling of the financial crisis of 2008. It will take just a few minutes of your time to listen to his commentary, and it will be time well spent.

Here is the link to the full Video

REFRAMING THE DEBATE ABOUT PAYDAY LENDING By Robert DeYoung, Ronald Mann, Donald Morgan & Michael Strain Posted: Oct 21, 2015

[ The following article about payday lending was posted by the Federal Reserve Bank of New York on its website, Liberty Street Economics, on October 19, 2015. It is an intelligent and balanced presentation of the issues, and I commend it to you.]

Except for the ten to twelve million people who use them every year, just about everybody hates payday loans. Their detractors include many law professors, consumer advocates, members of the clergy, journalists, policymakers, and even the President! But is all the enmity justified? We show that many elements of the payday lending critique—their “unconscionable” and “spiraling” fees and their “targeting” of minorities—don’t hold up under scrutiny and the weight of evidence. After dispensing with those wrong reasons to object to payday lenders, we focus on a possible right reason: the tendency for some borrowers to roll over loans repeatedly. The key question here is whether the borrowers prone to rollovers are systematically overoptimistic about how quickly they will repay their loan. After reviewing the limited and mixed evidence on that point, we conclude that more research on the causes and consequences of rollovers should come before any wholesale reforms of payday credit.

Here is the link to the full article

Fannie-Freddie Lawsuit Should Matter to the Masses by Joseph Colangelo, published by American Banker on September 4, 2015 Posted: Sep 7, 2015

Most people are aware of the ongoing legal battle waged by Fannie Mae and Freddie Mac shareholders against the U.S. government. But the lawsuit also has broader implications for consumers that have thus far gone unacknowledged.

In the midst of the housing crisis, the two government-sponsored enterprises were placed into conservatorship under terms outlined in the Housing and Economic Recovery Act of 2008. This agreement allowed the entities to access Treasury funding and therefore continue providing liquidity to the mortgage market. In exchange, the government acquired a 79% ownership stake in the GSEs by way of purchasing common shares.

ASSET PRICES ADJUSTING AS PREDICTED!!! by Bill Dunkelberg, Chief Economist, National Federation of Independent Business Posted: Aug 25, 2015













National Federation of Independent Business

American consumers have about $14 trillion in debt and a net worth of over $80 trillion according to the Federal Reserve. Net worth is the sum of the values of all assets, real and financial, that consumers own, less their debt, including mortgage debt, leases, credit cards and the like. The wealth we hold is a way of storing purchasing power. You can sell your shares of Apple and buy “stuff”, goods and services. Ultimately, for most consumers, that’s what our wealth is used for, to acquire “stuff”. Some of our assets provide services directly such as our houses and cars. The real services received from these assets would seem to be unchanged over time even though their market prices vary. As the market value of your house rose and then fell, did the real housing services you received rise and then fall as well? Probably not.

Just Do It, Janet: Time for a Fed Rate Hike by Richard M. Kovacevich Posted: Aug 16, 2015

Why must we continue to read, listen, and converse about when the Federal Reserve will increase the Fed funds rate to an infinitesimal one-quarter of one percentage point? Just do it and get it over with.

A review of Federal Reserve’s unconventional monetary policies shows that few of the central bank’s recent actions have achieved their desired goals. Therefore the central bank has little to lose in moving ahead with such a minor rate increase.

The Fed put the U.S. through three rounds of quantitative easing. Through all of them, the economy limped along at an average gross domestic product growth rate of about 2.3%–the slowest economic recovery since World War II. After each round, observers worried that ending QE would be bad for the economy.

What happened? Very little. The economy is still growing at about the same sluggish pace. Long-term interest rates haven’t changed that much.

Meanwhile, the Fed has held off shrinking its balance sheet. This is a mistake. The central bank should allow its current $4.5 trillion securities holdings to decrease as principal payments and maturities occur.

Here is the link to the full article

Zero Hour: What the Fed’s Next Move Could Mean for the Economy, OUTLOOK Economic Data and Commentary by Alex Pollock Posted: Aug 16, 2015

[My friend Alex Pollock, resident fellow at the American Enterprise Institute, gave a very thoughtful and interesting interview on the Federal Reserve’s monetary policy strategies in recent years to Co Bank, a large cooperative bank serving the agricultural industry. I believe you will enjoy reading Pollock’s interview, and I highly recommend it to you. We are clearly in uncharted waters with monetary policies in the U.S. and throughout the world.]

Don’t Forget the 1980’s by Alex J. Pollock Posted: Feb 27, 2015

It should be a deeply sobering thought for Americans that the U.S. housing finance sector has collapsed twice in the last three decades. Of course, we know that there was the painful shriveling of the huge U.S. housing and mortgage bubble of the 2000s, but only twenty years before there was the mass failure of the savings and loan (thrift) industry, up to then the dominant mortgage lenders, first from interest rate risk and then from bad loans. That resulted in the failure of the government’s savings and loan deposit insurance fund, which required a $150 billion taxpayer bailout. The bonds sold in 1990 to finance that bailout run to 2030, so the taxpayers will be paying for the 1980s bailout for 15 more years from now! Does the U.S. as a nation have a natural ineptitude for housing finance? Moreover, the savings and loan crisis was mixed together with a severe commercial banking crisis.

Here’s a financial history quiz: How many U.S. thrift institutions and commercial banks do you think failed or had to get government assistance in the 1980s crisis? Before you read the answer, what’s your number?

About that $191B Profit from the GSEs By Erika Morphy published in the, February 18, 2015 Posted: Feb 18, 2015

WASHINGTON, DC—Last week when the White House released its budget for fiscal year 2016, it included one eyebrow-raising line item: it assumed that Fannie Mae and Freddie Mac could return $191.2 billion in profits to the US Treasury over the next decade if they continue operating under federal conservatorship.

The item gave the commercial real estate industry pause for a few reasons. This number 1) assumes the GSEs will remain under federal conservatorship 2) it assumes that the lawsuits filed by GSE shareholders disgruntled by the government’s decision to sweep all profits from the GSEs back to the US Treasury will go nowhere 3) it assumes the GSEs will continue to bring in record profits.

After the Housing Crisis, a Cash Flood and Silence By Gretchen Morgenson published in the New York Times, February 17, 2015 Posted: Feb 17, 2015

On Aug. 17, 2012, the federal government began expropriating all the earnings of Fannie Mae and Freddie Mac, the mortgage finance giants that succumbed to the 2008 crisis.

Now the government is taking extraordinary measures to keep secret the deliberations surrounding that action. What exactly is it trying to hide?

That is the question being asked by a Fannie and Freddie shareholder who has sued the government over the 2012 profit grab. The investor contends that the move amounted to an improper taking of its property; the government disagrees.

Margaret M. Sweeney, a judge in the Court of Federal Claims, will determine who is right. But in the meantime, consider the remarkable secrecy demands that the government has made in the matter.

Here is the link to the full article

REGULATION OF SHADOW BANKING TAKES A DARK TURN A ‘chain’ of routine securities transactions, the Fed suggests, can transform a non-systemic firm into a systemic firm By Peter J. Wallison Posted: Feb 12, 2015

Feb. 9, 2015

Recent statements by senior Federal Reserve officials show that the agency is stepping up efforts to investigate and ultimately regulate what they call the “shadow-banking system.” As the regulators define that term, it is nothing less than capital and securities markets—the industries principally responsible for the growth of the U.S. economy over the past 40 years.

In December, Stanley Fischer , the Fed’s vice chairman and head of its internal systemic-risk committee, told an asset-management group that the New York Fed is “mapping” the relationships between and among financial institutions with a view to determining the scope of the shadow-banking system. The Fed, he said, is considering whether it has sufficient authority to regulate shadow banks. If it doesn’t, he said, the Fed will turn the matter over to the Financial Stability Oversight Council—created by the Dodd-Frank law and made up of the heads of all federal financial regulators, with the Treasury secretary as chairman—for appropriate action.