YouSaid · the spoken record

Bill Isaac

lines on the record: 114
first: 2023-08-22
most recent: 2023-08-22
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Who's defending negative race forever? I understand that. And I know that you, but first of all, you're trying to be provocative to some extent, and that's what makes interviews interesting is when they get provocative. But I know that you are not a crazy. And if I thought you were, I'm not sure how long this interview would have lasted not very long. Well, thank you.”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“Debt going back to the sovereign level. You're focusing much more on the government than on the banking, which I expected. But I have to say, yeah, in 2020 and 2021, there was so much money printing that I think your theories are dead accurate to describe what occurred where if the government's not spending that much money and the fed's doing QE, okay, that's one thing. They're just printing bank reserves and that's it. But when the government is borrowing money from the Fed who's trillions of dollars and then they're just giving it to people and they're giving it to companies and they're giving it to everyone, I mean, that is going to cause inflation. So I'm with you. I am not one of those people. I just want to clarify who says, oh, the reason inflation was at 9% is because of supply chain. Obviously, that played a role. In the same way, oil, you know, the reason the price of gas went from a buck to five bucks is because of OPEC in 1974. But there's a secular driver of inflation, which is.”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“Well, thank you. I so appreciate that. And I enjoy the chance to banter with someone who literally ran the FDIC during the early part of the savings and loan crisis. Yeah, I mean, you're thinking just about”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“Don't get a chance to have extended conversations like this when you do an interview. And not everybody is as well informed as you are. It's been fun to have some banter.”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“He's right outside the board room. And the FTIC had some of its offices bombed in the Midwest because of the farmers all concerned about things. And so there are some crazy people in this world. And I'm not too concerned about it. I had a good life and basically been very, very privileged to lead this life and be able to be in the public arena. But let me just say I really appreciate this conversation. You don't get a chance very often to have an extended conversation. You know, when you give an interview on TV, if your answer is longer than 30 seconds, the questioner runs out of patience pretty quickly. And so to be able to have this back and forth, I tell you that I really enjoy this because”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“Well, the firm, by the way, I hope you don't want to come and visit me with a gun and all that sort of stuff. No, no, no, no, no, no. No, I'm just joking. But it's a crazy like they did with Volcker with the background.”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“I wouldn't have complained about any of that if they had done it for a reasonable period of time. And what's a regional period of time? I don't know, a year, two years. Just like whatever Booker had to decide about 21%. But they came up with a theory. Money could be at near zero. For a decade and not have any strange effects, not any bad effects. And I'm 100% confident that was a bad plan.”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“Definitely not that smart. Yeah, I think some papers point out that they're diminishing returns to zero. And I mean, the track record of negative rates is quite poor. I mean, you have negative rates in Europe and they don't have a booming economy. Yeah, that extra stimulus from 2% to zero or you're even negative 50 basis points. It's, you know, maybe the juice isn't worth the squeeze. I totally agree.”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“The point I'm trying to make is that I can't second guess Paul Voker at 21% for a year or two, whatever it was. It seemed reasonable to me at the time. And was he too high maybe, a little bit? Could he have been done a little better if he'd been a little lower, maybe? And I'm not going to second guess the Fed”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“Definitely not pure science and the rules and relationships change all the time and probably 10% of things that are relevant you have control over. And the 90% you don't have control over. And I just looked it up. So like in 2013. Inflation was at 1%, and the unemployment rate was at 7.6% close to 8%. So if you're a believer in the dual mandate, which the Federal Reserve is, of low unemployment and 2% inflation, you're not there yet, right?”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“Want to. And I can't second guess Bernanke or whoever was in power at the time on 3% or whatever. That's fine. I mean, these people are doing a very difficult job. And they got to make some tough calls, and it's not all pure science. You got some judgment you got to use. Definitely not.”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“I'm sort of agreeing with you that I'm not going to second guess those who thought I can't second guess Paul Voker on 21%, okay? Yeah, no.”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“And maybe Paul Vover was right that he had to get interest rates up to 21% to get the economy calm down so that we could function normally. And I believe he did do the right thing. And I believe he was a very smart man who knew what he was doing. But some people don't. Some people thought he shouldn't have done it. I think you might think he shouldn't have done it. But that's your right. And my right to say, I think he did the right thing. But I don't know how anybody could argue that Paul Voker should have gone to 21% as long as he cared to. I agree with you.”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“Had really good thinking when they said we need to get interest rates down to close to 2%, 3%, 4%, somewhere really low to get this economy back. In the right place. Get it strong enough that it can They might have been right on that. I don't know.”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“Because you can't, it's like you're running in a marathon for 40 miles. You can't do that. Your body can't handle it. And so Paul Woker knew that. But you also can't go home and lie in bed for 40 years. I mean, your body needs some exercise. You need to have it functioning. And that's a terrible analogy I'm making. But it doesn't make any sense. To have an economy with 21% interest rates for an interminable. Period of time. And just as it doesn't make any sense to have rates anywhere near zero. For a significant length of time. Both of them are radical. And maybe Maybe the folks who handled The 2008 period. And I think Bernanke was the chairman of the Fed and followed by Yellen and so forth. But maybe the people who handled that period”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“And what Paul Booker did in taking interest rates from, say, 8% to 21%. Was an extraordinary measure that you would not normally want to see and you wouldn't want to see it for very long. Because what he was trying to do is kill inflation. And the only way to do that was to limit demand. And you limit demand by raising prices. Okay, and so I agree that if Paul Boker had kept interest rates at 21% for 10 years, there wouldn't be much left of the country. Okay, we certainly wouldn't have any shiny new buildings And so that would have been a bad thing. And Paul Voker knew full well that that would be a bad thing. But he also knew that, you know, we were in extremists. I mean, we needed to really stir, you know, tough shot of penicillin or whatever to get this economy well and get it down to normal.”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“But I would say that since pretty much 1913, 1914 are really whatever 1929, the short-term interest rates have been set by the Federal Reserve, not a market. Paul Volcker raising interest rates to 20% is just because he wants to constrain the economy because the economy is running so hot and inflation is so high, that is just as artificial as interest rates at zero because the economy is so weak that it needs a boost.”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“I can afford a much bigger house at 2.5%. Then I can when the rate's 7%. We have a market-based system in this country, and probably most countries, although us probably more than most. We depend on markets to help us make us allocate resources.”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“If I want to buy a house And I have to pay a 7% mortgage. That will go into my calculation of what I can afford. I know what my salary is. I know my expenses are what the taxes are, the maintenance and all that. And I know what I can afford. If the cost of that mortgage is 0.25.”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“Well, it's still a spread. Instead of the spread over the risk free rate of five, it's the spread over the risk rate of 0.2. Instead of the everything being price, I mean everything priced of a spread off of the risk free rate and that risk-free rate is five, 5.2, now it's 0.2.”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“No, it was a lot different. A lot different. I can't comprehend how somebody decided that this was a good idea. I know what we'll do. We'll make everything right in the banking system. We're going to get rid of interest rates, period. How are you going to decide who gets the money? How are you going to decide what What projects you're going to finance, whether they're good or bad.”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“From 2010 to 2020, we did not have markets that were functioning properly. Because interest rates were near zero globally. How can you have a banking system that's not market-based? You're going to decide who gets the money And what projects can be supported? It's to me, I don't understand why somebody didn't ask this question long ago.”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“It wasn't even that. But that was way lower than the market had been for a long time. And if it were four and six, okay, maybe for a short period of time. But you can't have a market-oriented banking system if you don't have market markets. You don't have markets. You don't have rates. And that's what we did. We took interest rates globally to zero and kept them there for 10 years. And then we wonder why we have problems?”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“Nothing's normal anymore. How can you have a regulated banking system, one that's regulated by regulators and one that's regulated by the markets? When the Don't get interest. And borrowers are not charged interest. It doesn't work, which is why”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“I'm not worried about 2009. I'm worried about the next 10 years and 15 years after that. They made a horrible decision to force the banks to take those loans. And I can tell you that one banker, Dick Kovasovic of Wells Fargo, When the Treasury told him that Wells Fargo was going to have to accept a $25 billion capital infusion from TARP, Kvasovich in a meeting with all a number of large banks and stuff, he was told by Paulson. See that woman over there and gossips, yeah. She runs the FDIC, and she's going to be in your bank on Monday if you don't take this Monday, this money. And you're going to regret your decision not to take the money. I guarantee you. So Kavasvitch took the money. And that happens with a lot of banks. And we put so much money out there, interest rates go to zero, and nothing's normal anymore.”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“You're going to turn $750 billion of bad loans. the civil servants of treasury. I wouldn't want to do that. And also, by the way, neither did Paulson in the end. Because what he did was he abandoned the $750 billion program. He did not use it except what he did is he made a bunch of loans to banks that didn't need the loans. A few that needed it. But he mostly forced $750 billion off into the capital of banks. You know what that happens when you do that, when you add banks $750 billion of capital? They loan multiples of that out.”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“But it all worked out. Why we decided we were going to dump 750 billion dollars of taxpayer money into the financial system. I don't know. TARP was a terrible program.”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“The Fed said to be a vet, well, B of A entered into a deal to buy Meryl, a part of Merrow. And then they did all this due diligence and they said, well, that's not for us because we don't want to take on that problem. And the feds, I'm going to use that word plural rather than the fed. The feds said, we need you to buy that. So buy it. And if you don't, we're not going to be happy with you and you don't want that. So they bought it. B of A is one of the strongest financial institutions in the world now after having bought. That institution. They bought I mean, Merrill was a great firm. It got into trouble. It needed help. It needed to have a stronger partner. They got one in B of A. And they're, as far as I know, they're pretty happy with themselves right now. They have to do some work, sure.”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“I understand the way the system works. No, no, I'm audience. But I'm saying that failure of layman. Failure of Maroul Lynch. What happened to Merrill Lynch? Merrill Lynch failed. Largest investment banking firm in the world. It failed. Bank of America bought it. End of story. And it's been a huge success. So, I mean, layman, I can't remember, but I think it was JP Morgan bought it, right?”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“So you're talking banking that take deposits. I'm including investment banks like Bear Stearns, Lehman Brothers, Goldman Sachs, which did not fund themselves with deposits FDIC's realm, but funded themselves in the wholesale repo markets.”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“There were not tons of bad loans in the banking industry in 2008. There were a number of bad loans in the financial system as a whole. The banking system was actually healthier than most of the rest of the financial system”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“So, how would banks have the wholesale funding markets of banks, how would that have worked out where no one is lending to anyone and the collateral that's been pledged, it's either worth way less than it is or even if it's good collateral, there's a total collapse of confidence. And there's just tons of bad loans on the banking and on the balance sheets.”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“Whatever it was, let's say seven or eight percent interest at that point in the 2000s. Say it was, let's say 7% interest rates was sort of the norm. Who came up with this brilliant idea that money should be free?”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“Too much money being pushed around too fast at too low rates. Who came up with the idea that we should have zero percent interest rates in this country or any country? I really don't know who came up with that idea because back in the 80s when things are, let's say the 70s and 60s, when things were more normal, rates were going up in the 50s, rates were way down. In the 60s and 70s, they go up. But in the 50s, they were never zero or close to zero. The mortgage might have been 5%. And then in the 60s, it might have been six or seven percent. In the 70s, it was 8% maybe. In the 80s, they went through the roof because we were trying to stop the inflation and stop this massive growth in money. So who decided in the year 2010 or there? That it would be a good idea for the world to go from”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“Well, They either deal with them or the government will deal with it for them. That happens. The question is how much of it is going to happen and how quickly, how severely I'm not overly concerned. I'd be lying to you if I said I didn't have any concerns. I mean, after what we just saw with Silicon Valley Bank and First Republic and the one in New York signature, I think its name was. And of course, that was not so much real estate as crypto and all sorts of things. But I think that I'm not going to say that there isn't another one or two here and there. I don't think we're going to have a crisis we can't handle. I really don't. But if Congress doesn't wake up. And deal with the real culprit here that set all this off. Too much money.”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“And That's harder for them to do because they don't have the stable long-term source of money that insurance companies had in long-term investment funds and the like. So we do have some duration issues, I think. And I think some banks are going to have to deal with that. And three or four of them just did.”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“The banks didn't used to make a lot of real estate loans, commercial loans, because that was usually the province of the insurance companies. And it was true in the 80s, I know, that insurance companies had a lot of the real estate. And they could do that because they had different funding. Insurance companies were collecting premiums on policies that stayed in place until you died 80 years later. And so they had more stable money. They didn't have depositors coming in to drop their paycheck in the bank. Which they would start to spend. So I think that insurance companies generally financed and other long-term lenders generally finance the commercial real estate and the banks didn't do much of that. I think the banks are more involved in that now.”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“And so we probably are going to have to figure out a way to deal, not probably, we're going to have to figure out a way to deal with that. Maybe it's just having more population growth until they get and stop building so fast so that we get those buildings more fully occupied and maybe the prices go up because there is more demand in relationship to supply. But we're probably going to have a period where that real estate is not going to make the kind of money it was thought to make, intended to make. And that means we're probably going to have some losses.”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“To go to places that have oceans and things like that, there's a lot of shifting of people. That means we have a bunch of buildings, just as the Chinese do, a bunch of buildings that are not fully utilized and are therefore probably losing money. Certainly they're making less money than they were intended to.”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“I'm in New York, and I could be talking to a banker right now doing some deal because we can because we can. And if I can do this over the internet and have this conversation, it's a lot better than having to drive to work an hour each way every day or to live in the middle of a crowded city. Instead, I look at the ocean here. So what I'm saying is that we have a lot of alternatives to living in all these wonderful towers we built. And a lot of people are making that choice. And then a lot of people are leaving places that are too crowded.”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“Up cities in the last 20, 30 years. And they're nice, pretty shiny cities. And they had lots of people and they were bustling and it was fun. But now... A lot of people don't want to live there. They want to work from home. And COVID sort of pushed that into the forefront, but it was probably going to happen whether or not we had COVID because all of the improvements in technology made it possible to work from home. Take me. I'm sitting here in Sarasota, Florida.”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“What I was thinking about at the time is the fact that we have gone through an enormous transition in this country that's still playing out. Banks are really heavy in commercial real estate loans. And just look at the cities. I've never seen so many tall buildings, new shiny buildings being built. They're all over the world. And you wonder, and I noticed it in China in particular as I was over there in the 80s when they were becoming part of the world. And it was incredible. I can't remember one of their largest cities. They sort of built it. like 10 years. And it was this great big city and it was all vacant. They were waiting for people to move in. And so, and it's not that bad everywhere, but of course that was a newly developing country. So they did do things faster than most. But my point is that in the United States, we have spent a lot of money on bill.”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“Not smarter than anybody else. We're not luckier than anybody else. We just are more prudent than most. We don't believe that we know any more than anybody else knows. We don't think we're smarter. We don't think we make better decisions. But we do everything in moderation. We don't grow anything too fast. Because when you've got growth rates that are beyond the norms, you're probably taking more risk.”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“We get up in the morning, put our pants on and go to work, and we earn money. If we work hard and we watch what we spend. And I think that the United States has been blessed because not very many countries have ever. Had the wealth growth that we've had in this country. We've been blessed. But we sure had our ups and a down. And we make a lot of mistakes on the way. And Once we, it's funny, when I was at my first job in the banking world as opposed to a lawyer, I was with a bank called First Kentucky. It was the largest bank in Kentucky. I learned an important lesson then. The chairman of the bank had been running it for some time, and the bank had something like 40 consecutive years of increased operating earnings. Yeah. And I used to talk with him and I say, how did you do that? I mean, nobody does that. He said,”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“And what I just said, everything in moderation. And I think that's what banking really is about. And I think it's probably what government should be about. Don't do anything that's just out of line. That is not. Use moderation in whatever you're doing, whether it's the government or running a bank. Be moderate. And that will serve you well. And when you start, and can somebody create, oh, let's say a car. Tesla and make a mazillion dollar But most of us can't do that. Most of them will ever do that. And there are some people in some businesses that are new. There's a new thing and it's exciting. They grow. And Ford Motor Company way back when was one of those companies. But most companies aren't like that. Most households aren't like that.”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“And I think a lot, I'm definitely Silicon Valley Bank. It was called a bank, but it could have been called Silicon Valley Thrift in terms of the duration exposure because they made a lot of mortgages. And they also bought so many mortgage-backed securities, agency mortgages guaranteed by Fannie Mae, Jinny May, that had a very similar duration component to a whole loan mortgage. It was just securitized. So something's really, I guess, never change.”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“And so there's nothing free in this. It's all got to follow the laws of economics. And so if you get rates moving too much, too fast, people are going to get hurt. And that's why, I mean, I really am opposed to. Rapid growth In general, because most people can't cope with it. Most businesses can't cope with it. You'd think rapid growth is great. It is within reason. Everything in moderation.”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“But a farmer can't raise his food prices fast enough to keep up with this cost of the interest rates that are going up so fast. And so all I'm saying is, yes, banks can hedge interest rates, and they try to. And they try to keep their deposit costs as low and as variable as they can. They try not to raise costs on deposits very fast and they want to do it as little as possible and still retain the deposits. But they do try to raise their interest rates as fast as they can. But you have the limit of how much you can charge that farmer before the farmer can't afford it because their farm prices are not going to go up that fast. And if they do grow up that fast, a bunch of other borrowers from banks are going to really be hurt because they can't afford to eat.”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“They couldn't possibly make loans fast enough and at rates high enough to make up for the fact that their deposit costs were going through the roof. So anyway, I think that All I'm saying is Separates thrifts from banks because they have different business models or did. But commercial banks did largely make Floating loans, I mean, whether it was a loan to a consumer and brought a credit card or whether it was a loan to a business, they have the ability to increase rates when their deposit costs go up. But that has a limit. And at some point, That interest rate cost becomes a big liability. Let's take the farmer. The bank that made farm loans, they had floating rate loans.”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT
“First of all We have to segregate the thrifts from the banks. The thrifts would never claim that because back in that day, because that was clear that when rates went up, they were not going to make money on that bet. Because they were paying deposit costs. That if they go up. Getting fixed rate returns on the assets that they own. The bank's in trouble. The thrift's in trouble because their cost of funding goes up and their cost of on the interest rate they receive is not going to go up because they're doing fixed rate loans back then.”
2023-08-22 · Forward Guidance · Government Debt Crisis Has Hit U.S. Banks | Bill Isaac, Former FDIC Chair · IDENTIFIED FROM THE TRANSCRIPT