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Former FDIC chairman makes ominous prediction about banks after sudden collapse of Silicon Valley Bank, Signature Bank



William Isaac, former chairman of the Federal Deposit Insurance Corporation, predicted Wednesday that more banks will fail after the collapse of Silicon Valley Bank and Signature Bank.

Speaking on Fox News, Isaac said the government's "out-of-control" fiscal policies will cause more banks to fail.

"I do think there’s probably going to be more failures along the way," Isaac, who served in the Raegan administration, told host Neil Cavuto.

"The problem we have is the same one that we had back in 1970s when the government was out of control with its fiscal policies, its monetary policies, inflation set in and banks were just not ready for that," he explained. "We wound up losing some 5,000 banks and thrifts during that period."

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Fortunately, Isaac said the economic pinch will not trigger as many failures this time around — but only because there are fewer today that can fail.

"We won’t lose anywhere near that number this time because we don't have that many," he said. "We only have about 4,500 banks today. 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. 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," Isaac added. "The government has had irresponsible fiscal policies for 20 years and pretty irresponsible Fed policy."

Of course, Isaac said the government can mitigate damages if it reverses irresponsible policies.

Meanwhile, while the government refuses to say it has promised a bailout despite saying the deposits at SVB and Signature Bank are guaranteed beyond the FDIC's $250,000 maximum, Isaac believes the government is "clearly" promising a bailout.

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‘We’ve Got Some Cleanup To Do’: Former FDIC Chair Says There Will ‘Probably’ Be More Bank Failures

'I don’t think this is the last failure'

Former top Treasury official has stark warning about banking system after Biden admin guarantees deposits at defunct banks



Roger Altman warned Tuesday that government intervention in Silicon Valley Bank and Signature Bank, two now-defunct financial institutions, "effectively nationalizes" the U.S. banking system.

The warning came after President Joe Biden said the U.S. government would guarantee the deposits at SVB despite the FDIC providing a maximum guarantee of $250,000.

What did Altman say?

Speaking on "CNN This Morning," the former deputy secretary of the Treasury Department said what the Biden administration did was "absolutely profound."

"They guaranteed the deposits, all of them, at Silicon Valley Bank. What that really means, and they won't say it, is that they have guaranteed the entire deposit base of the U.S. financial system, the entire deposit base," he said.

"Why? Because you can't guarantee all the deposits in Silicon Valley Bank and then the next day say to the depositors, say, at First Republic, sorry, yours aren't guaranteed — of course they are," he explained.

According to Altman, who worked in the Clinton administration, the federal government is now on the verge of nationalizing the banking system.

"This is a breathtaking step which effectively nationalizes or federalizes the deposit base of the U.S. financial system. You can call it a bailout, you can call it something else, but it's really absolutely profound," he said. "Now, the authorities, including the White House, are not going to say that because what I just said of course implies that they have just nationalized the banking system. And technically speaking, they haven't. But in a broad sense, they are verging on that."

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While the banking system has not been nationalized per se, Altman explained what the federal government did will forever change the relationship between the government, taxpayers, and banks.

"Usually the term 'nationalization' means that the government takes over the institution and runs it and the government owns it. That would be the type of nationalization we have seen in many other countries throughout the world," he said. "Obviously, that did not happen here."

But, he added, "When you guarantee the entire deposit base, you have put the federal government and the taxpayer in a much different place in terms of protection than we were in a week ago."

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