Former Chairman of the Federal Deposit Insurance Corporation, William Isaac, predicted that more banks will face collapse following the failures of Silicon Valley Bank and Signature Bank.
Former FDIC Chairman William Isaac to Neil: The government has had irresponsible fiscal policies for 20 years pic.twitter.com/suJrM7I1fH
— Neil Cavuto (@TeamCavuto) March 15, 2023
Speaking on Fox News, Isaac expressed his concern that the government’s “out-of-control” fiscal policies could contribute to further bank failures. He said, “I do think there’s probably going to be more failures along the way” and explained that a similar situation occurred in the 1970s when inflation and poor monetary policies led to the loss of “some 5,000 banks and thrifts during that period.”
“I do think there’s probably going to be more failures along the way” said Isaac.
Isaac, who served during the Reagan administration, emphasized that banks may not be prepared for such conditions again.
Isaac expressed some optimism that the current economic situation would not lead to as many bank failures as in the past. Isaac noted that the number of banks had decreased significantly since the 1970s, stating that “We won’t lose anywhere near that number this time because we don’t have that many.” While acknowledging that there may still be some failures, Isaac expressed confidence that the government is prepared to take action, stating that “I’m not concerned a lot about contagion. I believe the government knows what it’s doing. It’s willing to take actions. It knows how to take those actions.” However, he did caution that “I don’t think this is the last of the failures. I think we’ve got some cleanup to do.”
“Most importantly: The government’s got to get its act under control,” Issac said.
He also emphasized the importance of responsible government policies in addressing the current economic situation. “Most importantly: The government’s got to get its act under control,” he said, citing two decades of “irresponsible fiscal policies” and “irresponsible Fed policy.” Isaac did, however, suggest that the government could still minimize damages by reversing such policies. While the government has not explicitly promised a bailout despite guaranteeing deposits beyond the FDIC’s maximum limit, Isaac believes that the government is “clearly” implying a bailout.