Former FDIC Chairman William M. Isaac Launches New Global Advisory Firm ‘Secura/Isaac’

Former FDIC Chairman William M. Isaac Launches New Global Advisory Firm ‘Secura/Isaac’

It is my distinct privilege to share with you the launch of our new global advisory firm: The Secura/Isaac Group.
I am deeply honored to be joining a truly exceptional team of finance, regulatory and tech experts and friends, all of whom are much respected by financial institutions, regulatory agencies and central banks around the world. Together, we will help our financial services clients successfully navigate the increasingly complex regulatory landscape.

There’s more in today’s press release, a copy of which you will find below. And be sure to visit our new digital home at securaisaac.com for more information on our firm, its unique advisory services and regulatory expertise.

Have a great start into the new year and let’s please stay in touch. I hope paths cross again soon.
Bill Isaac, former Chairman, FDIC

 

Former FDIC Chairman William M. Isaac Launches New Global Advisory Firm ‘Secura/Isaac’
Expert team to help financial services sector address challenges caused by global pandemic, cybercrime and shifting regulatory landscape

NEW YORK/WASHINGTON, D.C. (January 13, 2022) – William M. Isaac, former FDIC and Fifth Third Bancorp Chairman, today announced the formation of Secura/Isaac, a global advisory firm. The firm specializes in helping clients navigate the regulatory landscape which has become exponentially more complex with the unprecedented challenges caused by rapid and enormous advances in technology, increasingly complex regulatory requirements, cybercrime, and a global pandemic. Mr. Isaac has assembled an expert team that is highly respected globally by financial institutions, regulatory authorities and central banks.

Through its guiding principles of honesty and integrity, high-quality work, and clear communications, Secura/Isaac focuses on corporate governance, risk management and regulatory compliance for the global financial sector. The team has an extraordinary breadth and depth of expertise in technology, regulatory domain, M&A and governance.

Chairman William Isaac has an unparalleled career in the financial industry and public service, spanning over 50 years. From 1978 through 1985, he served on the board of the Federal Deposit Insurance Corporation (FDIC) under Presidents Carter and Reagan and was named Chairman of the FDIC by President Reagan in 1981. As the youngest FDIC board member and chairman in history, Mr. Isaac led the FDIC during the banking and thrift crises of the 1980s, working closely with the late Federal Reserve Board Chairman, Paul Volcker, helping to maintain stability in the financial system during an extremely tumultuous period in which over 3,000 banks and thrifts failed, including many of the largest in the nation.

“It’s my distinct privilege to be leading such a distinguished and well-respected team,” said Mr. Isaac. “Having served for decades as bank lawyer, a top regulator, a board member, and as Chairman of a large bank, I know the perspectives and challenges of each. It’s an honor to be able to help bring financial executives and their regulators to common ground.”

Secura/Isaac offers highly customizable technology solutions, as well as advisory services in the areas of corporate governance, risk management and regulatory compliance; information governance, tech and cybersecurity; strategic planning; and safety and soundness.

“Uncertain times call for a fresh, entrepreneurial advisory approach,” said James C. Watkins, President of Secura/Isaac. “With exceptional experience and expertise, we are perfectly positioned to provide this perspective to our clients.” Mr. Watkins has nearly four decades of domestic and international bank regulatory experience and may be the only senior official to have served the FDIC through the bank and thrift crises of the 1980s and 1990s, the financial and banking crisis of 2008 to 2013, and the pandemic of 2020.

About Secura/Isaac

Secura/Isaac, a global advisory firm led by former FDIC and Fifth Third Bancorp Chairman William Isaac, is the preeminent strategic advisor and partner of choice for regulated financial institutions, non-banks, FinTech firms, central banks, and domestic and international regulatory agencies.

Drawing on extensive financial industry experience, regulatory expertise, and senior executive and regulatory relationships, the firm’s team of former regulators and financial executives helps the financial services sector address unprecedented challenges brought about by a global pandemic; rapid advances in technology; cybercrime and a shifting regulatory landscape.

More information can be found at securaisaac.com

What if politicians were required to tell the truth? by Thomas P. Vartanian and William M. Isaac published by The Hill

What if politicians were required to tell the truth? by Thomas P. Vartanian and William M. Isaac published by The Hill

My friend and well-known banking attorney, Tom Vartanian, and I wrote this op-ed in The Hill today in response to Governor Inslee’s recent proposal that elected officials be criminally prosecuted for making false statements about elections.  We think he did not go far enough and should have suggested that candidates and elected officials be subject to the same standards of honesty and punishments that public company executives and bankers are.  It just could reignite the lost art of political compromise. Bill Isaac, Former Chairman FDIC & Fifth Third Bancorp

Leadership is in scarce supply these days. So kudos to Washington Gov. Jay Inslee (D) for his courage in proposing the novel idea that truth-telling should be made mandatory for politicians. His proposal falls a little short of the mark in making it a crime only for an elected official to lie about election results.

But we hope there is more than political showmanship at work here and that the governor has a well thought out long-term strategy that doesn’t stop at election results. The natural evolution of his strategy must be to make it a crime for someone running for or holding political office to lie.

That would certainly be a welcome and seismic shift in the world of politics. It would make our elected officials and their political operatives live up to the same standards the rest of us are required to do.

Consider a world where politicians told the truth. They would have to publicly admit that their positions weren’t really their positions, and that if elected, they intended to serve the interests of those who contributed the most money to their campaigns.

Yikes, how refreshing would that be? They might even have to congratulate their opponents for doing something smart, rather than making believe that 100 percent of every word they said was drivel. That could be the first step back toward the dying art of political compromise.

How can we broaden the scale of Inslee’s idea? There is a good model that we know well — the rules that legislators have created for executives of public companies. They are required by law to tell the truth, the whole truth and nothing but the truth to their constituents — their shareholders.

The Securities Exchange Commission’s (SEC) Rule 10-b.5 makes it unlawful for any corporate executive to defraud a shareholder regarding the sale of the company’s securities. Congress and the SEC were smart — they did not leave that standard blurry so that it could be easily circumvented with weasel words that could trick people. They included as violations of the law not only making false statements but also omitting material facts that would be necessary to make the statements accurate.

Imagine this standard being applied to politicians regarding the sale of their candidacies and policies. Political speeches would be shorter, the media would have less to talk about and senseless debates at the dinner table over assertions that were never meant to be taken literally would be avoided.

Character and real policy issues would begin to matter. That would be a refreshing change of pace for all of us who are weary of listening to a barrage of incendiary political accusations and assertions every day. We suspect this change might even reduce psychiatric bills and the consumption of opioids.

To make such a truth-telling requirement work, there would have to be penalties attached to violations of the rules. Why not adopt the same rules that Congress wrote for bank executives? In the first instance, for lesser transgressions, the penalty would be monetary, with fines of up to $1,000,000 a day for each violation. As with banks, where fines are often assessed against the bank rather than the executive, they could be assessed against an elected official’s campaign funds. More serious violations would generate jail terms, just like bankers face for their misdeeds. And as in the banking business, where the FDIC sues managers of failed banks, elected officials could be held responsible for political fabrications that damaged those they represent. Fair is fair, right?

Of course, such a broad, symmetrical approach to truth telling has no chance of being enacted into law by the elected officials who would be subject to them. Gov. Inslee no doubt realizes that and has decided to start with a more reasonable first step, focusing on a pernicious election tactic being honed by losing candidates of both parties. Repeat a litany of factors that suggest the illegitimacy of an election until the assertion gains an air of believability, and then declare yourself not the loser.

If Inslee is suggesting that this strategy creates a cancer that eats away at democracy, he is right. But we hope that he will go to the next step and attack the larger problem by recommending that elected officials be held to the same standards of truth-telling that the rest of us are.

Thomas P. Vartanian is the author to “200 Years of American Financial Panics: Crashes, Recessions, Depressions And The Technology That Will Change It All” and executive director of the Financial Technology & Cybersecurity Center. William M. Isaac is former chairman of the FDIC and Fifth Third Bancorp, and is chairman of the Secura|Isaac Group and Blue SaaS Solutions.

Where have all the Leaders Gone? by William M. Isaac

Where have all the Leaders Gone? by William M. Isaac

Everywhere I go these days people are worried about the economy in general and the financial system in particular. They know something is terribly wrong but they don’t quite understand what it is or why. The primary problem is that the Federal government is functioning very poorly, and sometimes barely at all. We do not have a political consensus in this country and have not had one for most of the past two decades. We desperately need a new leader to emerge — a new Roosevelt, Eisenhower or Reagan who will take command, persuade us to take the long view, and do what’s right for future generations.

I’m sure they exist but our political system has not produced one in far too long. Our nation’s financial system has been on remote control for most of the past too decades with either no direction or the wrong kind of direction. The senseless financial panic of 2008 to 2010, the effects of which were felt for a decade thereafter, did not need to happen or to have had anywhere near the negative impact it did.

Due in part to phenomenal developments in technology, the economy and the stock market have been on fire the past several years, despite a seriously malfunctioning government. The administrative and congressional branches are in chaos, as are the financial regulatory agencies. Federal fiscal policy has been careening out of control since 2000, when the Federal deficit stood at just over $5 trillion.

It took over 200 years to accumulate that deficit. Now, just two decades later at the close of 2021, the Federal deficit stands at over $30 trillion, and the leadership of our currently ruling party is clamoring to add trillions more in debt. The Federal Reserve has ceased being a restraint on reckless political spending and instead has been printing excessive amounts of money, setting off inflation it took us more than a decade of destruction and pain to eradicate in the 1980s.

Where have all the leaders gone in our fragile democracy, and what will it take to get them back? We the people need to step up very soon and and elect strong new leadership to once again put our nation back on a sound footing. The longer we wait, the more painful the reconstruction will be. I’ve seen this movie before, and it does not end well without strong, wise leaders willing to make very difficult decisions and persuade us to follow their lead.

Bill Isaac, Former Chairman, FDIC

Reimagining the Federal Home Loan Bank System by Cornelius Hurley and William M. Isaac published by the American Banker on December 1, 2021

Reimagining the Federal Home Loan Bank System by Cornelius Hurley and William M. Isaac published by the American Banker on December 1, 2021

Con Hurley and I have been friends and colleagues for a very long time. Con was an attorney with the Federal Reserve in DC when I first arrived at the FDIC in 1978. He left the Fed to return to his native Boston and joined a leading regional bank. When I left the FDIC at the end of 1985, I formed a consulting firm — The Secura Group — and asked Con to join us and open an office in Boston, which he did quite successfully. These days Con is a professor at Boston University, among other things. He is an ardent Red Sox fan and a Democrat — he even ran for Congress years ago. Con wrote the article below, just published in the American Banker about reimaging the Federal Home Loan Bank System. He sent me a draft for review, and I found it so intriguing I volunteered to co-author it. Enjoy the read, as I believe the article is both thoughtful and thought-provoking.

A vital cog of the United States’ financial system is at risk. For 89 years, the Federal Home Loan Bank System has been a reliable source of liquidity for most of the nation’s banks, credit unions and insurance companies. Without meaningful change, this remarkable public-private partnership is nearing the end of its relevance.

Created in 1932 during the waning days of the Hoover administration, this intricate structure of 11 — 12 at the time — banks scattered across the U.S. has been a bulwark of our financial system. Member-owned but federally supported, these 11 banks have provided backup liquidity to their members through secured advances. The system is able to fund itself through debt obligations it issues that carry reduced risk premiums due to the implied guarantee of the federal government.

The Home Loan banks that make up the system are cooperatively owned by the financial institutions in their districts. This is in stark contrast with their distant government-sponsored-enterprise cousins, Fannie Mae and Freddie Mac, which were owned by profit seeking shareholders and are now in conservatorship. Each Federal Home Loan bank devotes a significant portion of its net income to affordable housing and to economic development in its district.

Through the Great Depression, numerous recessions, the Y2K scare, the savings and loan debacle, and other stresses in the financial markets, the system has been a stable source of funding for financial intermediaries. Long before the Federal Reserve rolled out its “urgent and exigent” instruments in the 2008 financial crisis, the system offered an oasis of funding when few others were in sight.

Read Full Article

To avoid virtual anarchy, we must move cautiously and fix things by Thomas P. Vartanian published by The Hill

To avoid virtual anarchy, we must move cautiously and fix things by Thomas P. Vartanian published by The Hill

My long-time friend, Tom Vartanian, has written another thoughtful article on the challenges and potential dangers involved in the rapidly developing growth in technology impacting our lives in so many ways, including our financial privacy. It seems clear that Congress needs to consider whether and how these firms and activities should be regulated. Developments in technology have and will continue to improve our lives, but substantial risks could well cause substantial damage to our well being if not addressed properly. It is past time for Congress, the states, and state and federal regulators to examine where we are and where we are headed and put sensible protections in place for all of us. I recommend that you read Tom’s latest article and get involved in the debate. Bill Isaac, former Chairman, FDIC.

Meta CEO Mark Zuckerberg’s oft-quoted mantra “move fast and break things” has turned out to be a dangerous strategy when it comes to the evolution of virtuality. It takes advantage of the propensity of people to leap off virtual cliffs in return for the transitory high delivered by the next hit of technology.

Zuckerberg wants to usher us into the metaverse — the next virtual chamber of pleasures and horrors. Proceed with caution, as the stakes are increasing as each new wave of technology subsumes more and more of our lives with no apparent sense of order or user control.

That is ironic since people work mightily to ensure the safety and stability of their analogue worlds through the establishment of rules, police, borders and armies. No one willingly invites strangers into their home and shares personal, medical, financial and other sensitive information with them. But there are vast numbers of us who do that every day online, often willingly, encouraging a virtual wild west of insecurity, unwanted surveillance and anonymous anarchy.

Meta CEO Mark Zuckerberg’s oft-quoted mantra “move fast and break things” has turned out to be a dangerous strategy when it comes to the evolution of virtuality. It takes advantage of the propensity of people to leap off virtual cliffs in return for the transitory high delivered by the next hit of technology.

Zuckerberg wants to usher us into the metaverse — the next virtual chamber of pleasures and horrors. Proceed with caution, as the stakes are increasing as each new wave of technology subsumes more and more of our lives with no apparent sense of order or user control.

That is ironic since people work mightily to ensure the safety and stability of their analogue worlds through the establishment of rules, police, borders and armies. No one willingly invites strangers into their home and shares personal, medical, financial and other sensitive information with them. But there are vast numbers of us who do that every day online, often willingly, encouraging a virtual wild west of insecurity, unwanted surveillance and anonymous anarchy.

Each day it becomes more apparent that the dark underbelly of technology creates parallel universes where crime is often undetectable, and supremacy belongs to whomever possesses the most advanced computers and skills. Indeed, hackers are collecting sensitive, encrypted data now in the hope that they’ll be able to unlock it using quantum computing in a decade.

A report issued by the United States Cyberspace Solarium Commission in March 2020, all but cries out for leaders to step forward and secure or reconstruct cyberspace.

Unfortunately, cyberattacks continue to be explained away as the downside of progress that we simply must deal with. This sense of “breach inevitability” shields companies and governments from the harsh criticisms and economic penalties that might otherwise compel them to require more strongly coded software, more resilient hardware and less vendor or employee-triggered cyberattacks. The “apologize, rinse, and repeat” approach should not excuse inferior products or processes.

I have come to believe that the internet is broken, and that we need a new one. Today’s internet has evolved into a form of virtual chaos where data is up for grabs, innovation is rewarded and insecurity rarely punished. Unlike the analogue world, every person and company in cyberspace has essentially been deputized to be responsible for their own defense. It is as if the secretary of defense has ordered 7-Eleven to purchase ballistic missiles to defend every one of its stores from attacks by nation states. It is no wonder that vulnerabilities are increasing at an exponential rate like cyber canaries gasping for air in virtual coal mines.

The metaverse is billed as the next generation of the internet — a virtual quilt of interconnected online video games, the world wide web, social media, online shopping and cryptocurrencies. The rules there will again be made by innovators driven by “progress” and the billions of dollars that can be made from selling technological snake oil and collecting even more data about us. How can it make sense to dive headlong into that world and cede even more personal space to progress when we have hardly figured out how to manage our security and safety in the virtual world we already have?

We have failed at making virtual spaces safe and educating users about the risks. And no one has confronted the fundamental question virtual reality raises: Who should be making decisions about what virtual governance should look like and how it should function? We all want to believe that the government is all over this problem and that we are somehow protected. It is not, and we are not.

The challenge is complex. Nation states, criminal cartels and terrorists are working overtime to achieve the functional equivalence of geopolitical superiority that they could never have attained in the analogue world. If a government assumes the job of regulating virtual reality, bureaucracies will grind progress to a halt in that country while others continue to sprint forward. If we ignore governance or leave it to technologists, we will continue to have increasing virtual anarchy. Society is faced with two bad choices, which means we will have to find the best worst option, a daunting challenge indeed.

Global partnerships between the public and private sectors must begin to orchestrate the future of technology and the security of virtuality to ensure that order prevails in cyberspace, the metaverse or whatever technological nirvana follows them. That should include stronger authentication, increased governance, consumer transparency, the imposition of security standards and rating systems, more secure software, more resilient hardware and the establishment of enforcement mechanisms.

Identifying the problem is the easy part. Finding and balancing the potential solutions is perhaps in the greatest existential challenge that humanity faces. But given the alternative, solutions must be found. Governments can’t do it alone, and the private sector won’t do it. We are in a pickle that requires global leadership, if that is possible.

With apologies to Zuckerberg, it is time to move cautiously and hope we don’t break any more of the worlds we live in.

Uncommon Bravery and Statesmanship in Perilous Times By William M. Isaac

Uncommon Bravery and Statesmanship in Perilous Times By William M. Isaac

Like many, if not most, people I have been very concerned lately about the condition and future of our nation. We face a badly divided and highly partisan Congress; a stubborn global pandemic; violent crimes and general lawlessness throughout many of our cities; spiraling inflation; widespread homelessness; rampant drug abuse; unimaginable wealth held by a handful of super-rich while the fortunes of the middle and lower classes are flagging; U.S. jobs deported throughout the world while millions of unvetted illegal aliens flood through porous U.S. borders; Medicare and Social Security seriously under funded; and the Federal deficit nearing $30 trillion, up from $5.6 trillion in just the past two decades.

The last four Presidents from both parties — Presidents Bush, Obama, Trump and Biden have run up nearly six times the deficits as the previous 42 Presidents combined. Yet, the majority in the current House and Senate, with strong encouragement from the White House is seriously considering somewhere around $5-6 trillion of additional deficit spending to stimulate the economy and rebuild our nation’s infrastructure.

Suddenly, a lone U.S. Senator from West Virginia has displayed both courage and integrity reminiscent of political leaders from our nation’s past. In an op-ed on September 1 in the Wall Street Journal, Senator Joe Manchin (D.WV), steps forward and proclaims that he will cast his vote against the $3.5 trillion infrastructure bill, which is part of an overall $5-6 trillion spending package pending before Congress.

In his op-ed (see link below), Senator Manchin declares “[S]ome in Congress have a strange belief there is an infinite supply of money to deal with any current or future crisis, and that spending trillions upon trillions will have no negative consequence for the future. I disagree. . . . Now Democratic congressional leaders propose to pass the largest single spending bill in history with no regard to rising inflation, crippling debt or the inevitability of future crises. Ignoring the fiscal consequences of our policy choices will create a disastrous future for the next generation of Americans.”

Senator Manchin’s bravery and intellectual honesty means that massive spending bills pending in this Congress, which the Democrats control with the Vice President’s vote as a tie-breaker, will likely come to a screeching halt, and hopefully the Congress will end a twenty-year dreadful run of lavish and irresponsible spending under four Presidents, two from each party. I am a Republican appointed to the FDIC board of directors by President Carter and named Chairman by President Reagan to help control and resolve a massive breakdown in banks and S&Ls from 1978 through 1992. I can only hope that Senator Manchin stands his ground for fiscal sanity this year and decides to run for President in 2024.

Read WSJ Article by Sen. Manchin

Comment by David Scudder on Vartanian/Isaac OP-ED

Comment by David Scudder on Vartanian/Isaac OP-ED

Tom Vartanian and I have received many comments on our recent American Banker article (“Financial Crisis is Edging Closer. There’s Still Time to Fix it.”). It has clearly struck a chord with a lot of thoughtful and respected people worried about the future of our nation and its economy. The letter below from David Scudder is particularly thoughtful so with his permission I am posting it on my website and my LinkedIn site. David is a well respected investment manager who has spent over 50 years in high-level management of several large and successful investment funds. I could not agree more with the conclusion that it is past time for mainstream Democrats, Republicans and Independents, alike, to come together to fix what is terribly wrong with US monetary and fiscal policies.

Bill, I like your paper very much but I do have some questions.

First, I am very much in agreement with the following statements:

  1. “What we have been doing over the past half century is creating an endless continuum of booms and bigger and bigger busts”.
  2. “Financial crises are built brick by brick through a collision of government policies and private sector actions and reactions, often in periods where the velocity of innovation and pace of economic growth are the greatest”.
  3. We are “creating too much money, too little market discipline, and too many misplaced expectations”.

As for the twelve points, I could quibble about some and want to add others. But let’s leave those quibbles aside.

I do agree with “the regulation of institutions and markets must become smarter… and the government must begin deploying technology…to provide regulators with mountains of real-time information”. And “the country must be serious about reimagining job education”.

I think you leave out some other points:

  1. Banks must be subject to much stricter rules of transparency, especially for opaque instruments like derivatives, and any asset backed security that is not immediately understandable by regulators and other observers of a bank’s balance sheet.
  2. Regulation must become not just smarter but also tougher and earlier in the business cycle.
  3. If it is too late to go back to Glass-Steagall, then at the very least make too-big-to-fail institutions hold even more capital than the Dodd/Frank regulations require, and enforce transparency rules more strictly, despite the howls that sophisticated bankers will utter.

I am a believer that finance—which is both one of the greatest innovations of an economy of all time, and also one of the most dangerous—must be carefully tamed by a recognition that bankers’ self-interest will drive the most venturous towards too much leverage, too much gambling on brand new financial instruments which are comparatively untested, and eventually too much risk. Actually, this has been the story of finance for at least two centuries, although clearly the pace of speculative innovation has picked up in the last 50 years.

I am also a believer, in order to make real progress towards federal budget discipline, that it will take significant sacrifices from each major political party. That is a tall order. Let me make what I consider to be a radical suggestion, sufficiently radical that at least 95% of your readers (both Republicans and Democrats) will immediately disagree with it. Only after some careful thought might some of them see its worth.

Remember that before the 2017 tax cut was passed, we had nearly full employment and still a deficit of about 2 to 2 ¼% of GDP. After the tax cut, the deficit went to 3 3/4 to 4% of GDP. Let’s set the goal of getting back to a budget deficit of no higher than 2 ½% of GDP. To get there, I propose two things:

  1. The Republicans agree support a bill for higher taxes amounting to about the same percentage of GDP that was removed by the tax bill passed in 2017.
  2. The Democrats agree that no further big spending initiatives, after the $500 billion already agreed on infrastructure bill, will be enacted (i.e., withdraw in totality the $3.6 trillion plan).

Then, both parties also agree that no new spending initiatives will be undertaken without added revenues being raised to support them. No sane Republican or Democrat is going to agree to this compromise right off the bat. Which is exactly why I like it. It exposes the politicians for what many of them are: not at all interested in the betterment of the country’s fiscal picture but only in their own priorities.

To accomplish what I think your paper is really after will take such a compromise.

David W. Scudder,
Boston, MA

BankThink The next financial crisis is edging closer. There’s time to stop it. By Thomas P. Vartanian, William M. Isaac published by American Banker

BankThink The next financial crisis is edging closer. There’s time to stop it. By Thomas P. Vartanian, William M. Isaac published by American Banker

My friend Tom Vartanian and I are very troubled by the condition of the U.S. and global economy in the wake of the recent pandemic and the incredibly loose fiscal and monetary policies over the past decade with even more on the drawing board. Feeling we needed to do something to help unleash a public debate about these dangerous policies, Tom and I co-wrote an article published today by the American Banker. I hope you will read the article and join the debate.

The next financial crisis is on its way.

Over the last two centuries, the United States has averaged a financial panic every twenty years, the second-highest incidence of economic disaster of any country on the planet.

Sure, many expect a post-COVID period of accelerated financial growth. Financial ups and downs are a natural part of any economy. But what we have been doing over the last half century is creating an endless continuum of booms and bigger and bigger busts that is increasingly difficult to break.

Financial crises are built brick by brick through a collision of government policies and private sector actions and reactions, often in periods where the velocity of innovation and pace of economic growth are the greatest. It all climaxes when a loss of public confidence converts the energy of economic euphoria into a race from risk. Nomura Bank’s Cassandra model recently warned that the U.S appears vulnerable to a financial crisis over the next twelve quarters.

Read Full Article

How Congress can prevent a post-pandemic financial crisis, by Blaine Luetkemeyer and William M. Isaac

How Congress can prevent a post-pandemic financial crisis, by Blaine Luetkemeyer and William M. Isaac

“Everyone is convinced that accounting standards are simply too boring and too intricate for anyone to pay attention to.”

Those were the opening remarks of Rep. Brad Sherman, D-Calif., during a House Financial Services subcommittee hearing earlier this year with accounting standards officials. Sherman, a CPA and the chairman of the subcommittee, is absolutely right. To most Americans, accounting is boring and appears too menial to spend time reviewing.

However, when looking at the astonishing impacts accounting standards have on the U.S. and world economy, everyone would be well served to resist glazing over the rules, and pay close attention to what’s brewing in Norwalk, Conn., where the Financial Accounting Standards Board is headquartered.

Paying close attention, however, is not sufficient. FASB is a self-appointed private entity operating with impunity and virtually no supervision from Congress or the federal financial regulators. Congress must act soon to ensure the Securities and Exchange Commission and other financial regulators have proper oversight of this powerful, private-sector organization.

Lack of oversight of FASB has resulted in devastating impacts on the nation’s economy in the past and will continue to do so in the future if safeguards are not enacted soon.

Read Full Article