by Michael Noer, Executive Editor for Opinions & Special Reports for Forbes
During 1985, the last year of Bill Isaac’s reign as chairman of the Federal Deposit Insurance Corporation (FDIC), there were 120 bank failures in the U.S. Savings banks were in crisis, insolvent to the tune of $100 billion. Displaying great flexibility, Isaac decided to shutter some banks, while saving others. In the end the FDIC spent just $2 billion resolving the crisis. Contrast that with the savings and loan crisis that followed in the late 1980s and early 1990s. Another regulatory board, the FSLIC, regulated the thrifts and in the end nearly 750 of them failed, costing the American taxpayer $150 billion. Or even more to the point, compare Isaac’s masterful performance to the bungling that characterized Washington’s response to the financial crisis of 2008.
Isaac’s Senseless Panic: How Washington Failed America is in every sense an angry book. It is an angry book because Bill Isaac is by no means pleased with the string of policy blunders (mark-to-market accounting, pro-cyclical regulatory regimes from FASB and the SEC, the repeal of Glass-Steagall, etc.) that led to a global financial meltdown in the fall of 2008. It is an angry book because by the end of Isaac’s incisive analysis, you will be furious with Washington D.C.’s short-sighted politicians and bureaucrats. It is also a clear and well written book that is required reading for anyone who wants to understand what went on with Fannie, Freddie, IndyMac, AIG, Lehman Brothers and all the rest only a few short years ago and who wants to understand absurd regulatory environment still faced by CitiGroup, Goldman Sachs, Bank of American, and JPMorgan Chase. Read an excerpt from Senseless Panic here, browse Isaac’s columns for Forbes here, or watch my video interview with him below.
About the author: Michael Noer is the Executive Editor for Opinions & Special Reports at Forbes.
Original Post Found Here: http://blogs.forbes.com/booked/2010/07/30/booked-bill-isaacs-senseless-panic/