BankThink A cautionary tale on brokered deposits By William M. Isaac

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columns from William Isaac in top financial publications

November 9, 2018

BankThink A cautionary tale on brokered deposits By William M. Isaac

BankThink A cautionary tale on brokered deposits By William M. Isaac

November 9, 2018

The Federal Deposit Insurance Corp. is considering changing its rules governing brokered deposits, as American Banker recently reported. A number of bankers have urged the FDIC to liberalize the current rules so they might fund their banks more readily and extensively by purchasing money from deposit brokers. I would caution bankers and the FDIC to tread cautiously in this area.

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MEDIA COVERAGE

FASB’s Latest Action the Last Straw – Your Help is Urgently Needed
18 Jul 2019
Informed experts know that the mark-to-market accounting rules issued by the Financial Accounting Standards Board (FASB) in the last decade led directly to the unnecessary charge off of $500 billion of bank capital in the US. This, in turn, led to an economic collapse, massive taxpayer infusions of capital into banks and other financial institutions, […]
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Easy Monetary Policy: A Threat to the Future by William C. Dunkelberg, Chief Economist, National Federation of Independent Business
29 Apr 2019
As the current economic expansion nears record length, observes more frequently publish lists pf “risks” that could precipitate a recession and an end to the expansion: weak global growth, China, the “black swan event” du jour, a Federal Reserve policy error, fiscal insanity, and the old inverted yield curve. Pick your favorite interest rates (or […]
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Why the Universal Use of the 30-Year Mortgage Is Dangerous by Edward Pinto published by the RealClear Markets on April 22, 2019
25 Apr 2019
The short answer is that the 30-year mortgage amortizes extremely slowly, making it nearly twice as risky as a similar loan with a 20-year term. And the 30-year loan compounds risk-layering by promoting the use of higher combined loan-to-value and debt-to-income ratios (DTI). The Housing Lobby unabashedly supports the broad availability of the 30-year mortgage, […]
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BankThink With stress tests, less is more by Thomas P. Vartanian published by the American Banker on April 18, 2019
19 Apr 2019
Dynamic stress testing — or using econometric models to forecast a financial institution’s income and regulatory capital through hypothetical economic shocks — is a good idea. But the Federal Reserve’s rules need to keep improving to make them less onerous and more reliable. Fortunately, the Fed seems to agree, having taken several recent steps in […]
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BankThink Fed ‘independence’ is a slippery slope by Alex J. Pollock published by American Banker on March 21, 2019
21 Mar 2019
Many observers, like Captain Renault in “Casablanca,” were “shocked, shocked!” at President Trump’s sharp criticism of the Federal Reserve and his attempt to influence it against raising interest rates, inquiring whether the president can fire the Fed chairman. Yet many presidents and their administrations have pressured the Fed, going back to its earliest days, when […]
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PUBLISHED WORKS

Why the Financial Accounting Standards Board must hit pause on CECL by William M. Isaac and Thomas P. Vartanian July 24, 2019 “Those who fail to learn from history are doomed to repeat it.” Winston Churchill’s words should serve as a warning to the Financial Accounting Standards Board (“FASB”) regarding the Current Expected Credit Loss accounting standard (“CECL”). If FASB looks to the past, it will appreciate why the implementation of CECL should be paused and substantially rethought. The ...
A broken accounting system in need of repair by William Isaac and Thomas Vartanian published by The Hill on May 28, 2019 May 28, 2019 The Financial Accounting Standards Board (FASB) continues to forge ahead with its plan to require banks to forecast and book current expected credit losses (CECL) over the life of loans without even an offsetting credit for expected interest income. Bank regulators should not follow FASB down this dangerous path much as they did two decades ago. ...
BankThink FASB’s accountability problem by William M. Isaac and Thomas P. Vartanian published by American Banker on April 26, 2019 April 26, 2019 Great news for banks. We’ve decided to establish a self-governing body to create federal common law principles governing corporate conduct. Since Congress has never legislated in this area, the field is wide open. Our new Corporate Conduct Principles Board, or CCPB, will consist of lawyers, financial institution executives and former regulators. It will function as a ...
BankThink Accounting standards shouldn’t be left to the accountants, by William M. Isaac published by American Banker on January 4, 2019 January 6, 2019 The SEC and FASB are at it again with a plan requiring banks to forecast and book “current expected credit losses” over the life of loans without even a credit for expected interest income. Bank regulators are dutifully moving forward with plans to implement the new accounting standards. The impact could be very negative for most ...
BankThink A cautionary tale on brokered deposits By William M. Isaac November 9, 2018 The Federal Deposit Insurance Corp. is considering changing its rules governing brokered deposits, as American Banker recently reported. A number of bankers have urged the FDIC to liberalize the current rules so they might fund their banks more readily and extensively by purchasing money from deposit brokers. I would caution bankers and the FDIC to ...
BankThink Don’t reinvent the wheel on housing finance: Restore Fannie and Freddie, by William M. Isaac published by American Banker on February 16, 2018 February 18, 2018 BankThink Don’t reinvent the wheel on housing finance: Restore Fannie and Freddie Tackling the last piece of unfinished business from the 2008 financial crisis is a top priority for policymakers — the big question is how to do it. Recently, an early draft of legislation aimed at reforming the twin housing giants Fannie Mae and Freddie Mac ...

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