By Heather Landy, Paul Davis and Jeff Horwitz for the American Banker
Unplugged … Again
“Poppycock.” That was former bank regulator Bill Isaac’s one-word assessment of former Treasury Secretary Hank Paulson’s claim that he had no authority to rescue Lehman Brothers Inc., and it cut through the cocktail-hour din to garner laughter and applause from Isaac’s audience.
“They could have done anything other than what they did. They should not have let it go into bankruptcy,” said Isaac, who signed copies of his book, “Senseless Panic: How Washington Failed America,” after a reception Tuesday in New York’s Plaza Hotel. It was part of investment bank Rodman & Renshaw LLC’s annual global investment conference.
Isaac, chairman of the Federal Deposit Insurance Corp. in the early 1980s, also chided the Securities and Exchange Commission for regulatory missteps, accounting regulators for their interest in mark-to-market accounting and Congress for a host of reasons.
In short, the man was on a roll.
One of his biggest applause lines came when a conference-goer asked for his take on the new Basel capital requirements. “Well, I was against Basel II,” he said, citing what he said was its pro-cyclical nature and objecting generally to the idea that the United States would cede any authority over its financial system to an international consortium. Though Isaac said not enough details have been released for him to form an opinion on Basel’s newest iteration, he told the audience, “I think we can do better. I don’t think we should subcontract that out to a committee of 30 in Basel, Switzerland.”
Isaac is chairman of the consulting firm LECG’s global financial services practice and chairman of the board at Fifth Third Bancorp.