Bill Isaac has authored hundreds of articles in top publications and has frequently testified before Congress.


columns from William Isaac in top financial publications
DOJ’s ‘Operation Choke Point’: An Attack on Market Economy, by William M. Isaac published by American Banker on March 21, 2014 Posted: Mar 22, 2014

History teaches that when government bureaucracies try to direct economies, stifled creativity, distorted markets and low economic growth are inevitable results. One of the easiest and most insidious ways for bureaucrats to control the U.S. economy is through the banks, directing who gets – and who can’t get – loans and other essential banking services. That’s happening today, and it ought to alarm and frighten all of us.

Here is the link to the full article

The Crisis Was Not Wasted, Unfortunately, by William M. Isaac and Alex J. Pollock published by American Banker on March 13, 2014 Posted: Mar 14, 2014

With sharp insight and the cynicism natural to a Chicago politician, Rahm Emanuel famously pronounced in 2008, “You never want a serious crisis to go to waste.” A crisis, he continued, “provides the opportunity … to do things that you could not do before.” How true.

For those who wanted to greatly expand the power of government over banks and nonbank financial institutions and markets, especially to expand the discretionary power of unelected agencies; to do so outside the control of the Congress and the judiciary; and to move the financial sector toward bureaucratically directed, rather than market, outcomes, the financial crisis of 2007-9 was indeed a great opportunity. Unfortunately for the economy and private sector job growth, the political actors most definitely did not let the crisis go to waste.

So we got the Dodd-Frank Act of 2010. Dodd-Frank is part of a predictable pattern, as were the previous overreactions to various corporate scandals. The Sarbanes-Oxley Act of 2002, remember, was supposed to assure the identification and management of risk. It didn’t work. Neither will Dodd-Frank. Two other major banking crises during our careers were the real estate bust of 1974-76 and the multiple disasters of 1980-1992. In each case, Congress responded by piling on more burdensome laws and regulations. Each time, it failed to prevent the next crisis.

Here is the link to the full article

Payday Crackdown Creates More Problems than It Solves by William Isaac published by American Banker on February 18, 2014 Posted: Feb 21, 2014

There are more payday loan stores in the U.S. than all the McDonald’s and Starbucks stores combined. It’s clear that tens of millions of consumers across the nation want and feel they need this product. It’s equally clear that government policymakers believe they know what’s best for consumers.

Recent actions taken by the federal government to eliminate a variety of short-term loan products suggest a strong bias against all such loans – period. If so, regulators need to reconsider before they destroy a critical source of credit for families and the economy as a whole.

I want to make a couple of things clear before proceeding. Until April when I reach mandatory board retirement age, I am chairman of Fifth Third Bancorp, which is one of four large banking companies to recently abandon very popular short-term lending products in response to regulatory pressure. Also, my consulting firm has done regulatory compliance work for one or more payday lending firms. I’m not speaking for those companies.


[I began my career with the Foley & Lardner law firm in Milwaukee 45 years ago. I recently had the pleasure of returning to Milwaukee to address the Bank Executives Conference of the Wisconsin Bankers Association. It gave me an opportunity to reflect on how we might use lessons of the past to improve bank regulation dramatically. We deserve much better than we are getting. I hope you will take a few minutes to read the speech below.]

It’s a great privilege for me to return to Milwaukee to appear before the Bank Executive Conference of the Wisconsin Bankers Association. I began my career in Milwaukee in 1969 when I joined the Foley & Lardner law firm. I will always be grateful for the experience and wisdom I gained during that period, particularly the invaluable mentoring I received from Ted Wiley at Foley & Lardner.

The largest bank in the state — First Wisconsin, now part of US Bancorp – was an important client of Foley & Lardner, and I spent much of my time doing acquisition, correspondent banking, regulatory, and commercial lending work on behalf of First Wisconsin. I also represented a fair number of community banks throughout the state. It was a great introduction to an industry to which I would devote the rest of my professional career – some 45 years thus far and running.

I was appointed by President Carter to the FDIC board in 1978 and was named Chairman by President Reagan in 1981. The 1970s were a time of low economic growth and high inflation – we called it “stagflation.” Paul Volcker was appointed Chairman of the Federal Reserve by President Carter in 1979 with a mandate to get inflation under control. Volcker, a courageous and principled man, did just that – but at great cost. The prime rate soared to 21 ½%, wreaking havoc throughout the economy and financial system.

Fed’s Muddled Message Hinders Economic Growth by WILLIAM M. ISAAC AND RICHARD M. KOVACEVICH published by American Banker on January 6, 2014 Posted: Jan 7, 2014

Despite the Federal Reserve exploding its balance sheet over the past six years from less than a trillion dollars to nearly four trillion, average GDP growth over the period remains only about 2%. The average pace of the current economic expansion is less than half the average of the last four recoveries and well under the 3% long-term growth rate of the U.S. economy.

We believe this is due in significant part to a lack of confidence by private-sector decision makers. This is evidenced by the fact that liquidity on corporate and individual balance sheets remains at record highs despite the enormous opportunity cost of such liquidity due to near zero interest rates.

Confidence remains low notwithstanding reasonably solid, albeit low, GDP growth; slowly declining unemployment; turnarounds in the automobile and real estate industries; and the fact that the U.S. is on the verge of becoming energy independent.

Certainly part of the problem is the dysfunction in Washington. Until the recent modest two-year budget accord, private enterprise decision makers witnessed complete disarray in Washington with the shutdown of the government and the inability to pass budgets or get spending under some semblance of control.

These fiscal policy problems are compounded by the monetary policies of the Federal Reserve. Only academic economists could possibly believe that a timid $10 billion reduction in the purchase of Treasury bonds by the Fed, while continuing to purchase $75 billion a month, would negatively impact the economy and increase unemployment.

The path to economic growth is not to be found in quantum economic theory. The poorly handled economic crisis of 2008-2009 resulted in a severe worldwide financial panic and shook public confidence to the core. The challenge is to restore confidence in the future and convince private sector decision makers that better times are ahead.

Here is the link to the full article

Bill Isaac: Janet Yellen ‘Highly Qualified’ for Fed Chair on NewsMax, article includes audio of the interview, December 18, 2013 Posted: Dec 19, 2013

Janet Yellen is a “highly qualified” replacement for Federal Reserve Chairman Ben Bernanke, but will have her hands full calming “scared, nervous investors,” says Bill Isaac, senior managing director of FTI Consulting and former chairman of the FDIC.

“[Yellen] is highly qualified for the position . . . My guess is she’s going to take a greater personal interest in bank and bank holding company regulatory policies than Chairman Bernanke has,” he told the “Steve Malzberg Show” on Newsmax TV.

Here is the link to the full article

Don’t Regulate Asset Managers as If they Were Banks Posted: Dec 18, 2013

[A bi-partisan group of former senior regulators from the Securities and Exchange Commission, Commodities Futures Trading Commission, Treasury, and Federal Deposit Insurance Corporation – including Bill Isaac – authored a letter to the Wall Street Journal published on December 17, 2013 arguing against a suggestion by the Financial Stability Oversight Council that large hedge funds and mutual funds be subjected to bank regulation. The letter was accompanied by a supporting editorial by the Journal noting that “Veteran regulators warn against making asset managers too big to fail.”]

The letter can be found through this link

Keep the Volcker Rule Simple by William M. Isaac and Richard M. Kovacevich published by American Banker on December 3, 2013 Posted: Dec 3, 2013

After more than three years and some 18,000 comments from interested parties, the financial sector’s major regulatory agencies are locked in battle over how best to implement the Volcker Rule. We wholeheartedly support the Volcker Rule, but fear that regulators are making the proposed regulations more complex than necessary or appropriate.

The Volcker Rule, which is part of the Dodd-Frank financial reform law, is intended to impose strict limits on banks engaging in “proprietary trading” – i.e., betting the bank’s capital by significant speculative trading in financial instruments. Congress, as usual, gave general direction to the regulators to figure out how to implement the concept.

The regulators’ proposed rulemaking on the Volcker Rule is a whopping 298 pages of complexity that is not only difficult to understand but nearly impossible to monitor and regulate. There is a better way, as we suggested in a previous BankThink post. We believe the time is right for regulators to take a more holistic view of the issues.

Here is the link to the full article

Former FDIC Chief William Isaac to Moneynews: Fed’s QE Not Working, Causing More Confusion on NewsMax, article includes audio of the interview, September 19, 2013 Posted: Sep 22, 2013

The Federal Reserve’s quantitative easing program is not working and causes confusion, according to William Isaac, former head of the FDIC and senior managing director of FTI Consulting.

The decision announced by the Fed not to taper the program was “quite surprising, almost stunning,” Isaac told Newsmax TV in an exclusive interview.

“[QE is] taking money away that would be going to retirees or people close to retirement, making it very difficult for them to make spending decisions. It’s creating great uncertainty in the business community. Loan demand has flattened at all of the major banks in the past month or two. We don’t know what the future is.”

Here is the link to the full article

The Military Solution In Syria Won’t Work, by William Isaac published by Forbes on September 15, 2013 Posted: Sep 15, 2013

I’ve listened to and read virtually every point of view for and against a military attack by the U.S. against Syria, and I’m disappointed in the quality and focus of the debate. Too much media attention is given to the politics of who is up or down, as if this tragic and dangerous situation is the equivalent of a Beltway football game.

I oppose a military attack for reasons I will get into, but before I do let me explain my unique perspective. Many know me as a financial and regulatory expert who served as Chairman of the FDIC during the bank and S&L crises of the 1980s. People from my hometown know my paternal grandparents immigrated to Bryan, Ohio from Syria in the 1890s, likely to escape religious persecution as Christians (my maternal grandparents emigrated from Sweden so I’m an unusual ethnic mix).

Here is the link to the full article