Senseless Panic: How Washington Failed America |  | Author: William M. Isaac
Creators: Paul A. Volcker, Philip C. Meyer
Publisher: Wiley
Category: Book
List Price: $24.95
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Rating:  19 reviews
Sales Rank: 25,229
Media: Hardcover
Pages: 190
Number Of Items: 1
Shipping Weight (lbs): 0.9
Dimensions (in): 9 x 6 x 0.9
ISBN: 0470640367
Dewey Decimal Number: 332.10973
EAN: 9780470640364
ASIN: 0470640367
Publication Date: June 1, 2010
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Amazon.com Review
Product Description
The 1980s opened with the prime interest rate at an astonishing 21.5 percent, leading to a severe recession with unemployment reaching nearly 11 percent. Depression-like conditions befell the agricultural sector, a bubble burst in the energy sector, a rolling real estate recession swept the country, the entire thrift industry was badly insolvent and the major money center banks were loaded with third world debt. Some 3,000 bank and thrifts failed, including nine of Texas’ 10 largest, and Continental Illinois, which, at the time, was the 7thlargest bank in the nation. These severe conditions were not only handled without creating a panic, the economy actually embarked on the longest peacetime expansion in history. In Senseless Panic: How Washington Failed America, William M. Isaac, Chairman of the Federal Deposit Insurance Corporation (FDIC) during the banking and S&L crises of the 1980s, details what was different about 2008’s meltdown that allowed the failure of a comparative handful of institutions to nearly shut down the world’s financial system. The book also tells the rousing story of Isaac’s time at the FDIC. With accessible and engaging prose, Isaac: - Details the mistakes that led to the panic of 2008 and 2009
- Demystifies the conditions America faced in 2008, and
- Provides a roadmap for avoiding similar shutdowns and panics in the future
Senseless Panicis a provocative, quick-paced, and thoughtful analysis of what went wrong with the nation's banking system and a blunt indictment of United States policy. Amazon Exclusive: Review fom Professor Cornelius Hurley
Before “too big to fail” became part of our lexicon, there was Bill Isaac, Chairman of the FDIC in the 1980s. Drawing on his experience from that era leading the banking system out of a potential catastrophe, Isaac in his new book, Senseless Panic has provided us with a must-read analysis for anyone looking to understand the 2008 economic crisis. Senseless Panic offers both fresh insight and devastating analysis, showing how a pattern of governmental inaction and regulatory failures played leading roles in the meltdown. During the critical days in September 2008, when Congress was debating the original bailout package, Isaac was called on by a bipartisan group of legislators to educate Congress on the failings of the Government’s plan. He played a crucial role in defeating the initial proposal in the House. Though it eventually passed, Isaac presents a clear-eyed critique of TARP as an unnecessary and waste of taxpayer money. Isaac first gives readers a succinct and straightforward look at how in the 1980s the FDIC and Paul Volker’s Fed managed to stave off a brewing bank panic with unpopular but necessary steps. He provides a roadmap on how later the lack of political will, agency turf wars and boneheaded policy responses to the bank and S&L crises of the 1980s led to the current debacle. Isaac explains how banking regulators need to have the courage to promote unpopular countercyclical strategies to protect the financial markets. Isaac shows how the regulators botched the job, calling out a bipartisan collection of economic and political leaders including treasury secretaries, the SEC and FASB for their failed policies and poor reaction to the crisis of 2008. Senseless Panic is an important book, one that should be on the reading list of anyone interested in America’s economic well-being. Isaac shows how the failure to understand and appreciate the banking crises of the 1980s turned the inevitable economic downturn in 2008 into an economic force of destruction. For the next generation of economic policymakers looking to head off an economic tsunami, Senseless Panic is the place to start. Professor Cornelius Hurley
Executive Director, Morin Center for Banking & Financial Law
Boston University
Former Assistant General Counsel, Federal Reserve Board
Product Description
The 1980s opened with the prime interest rate at an astonishing 21.5 percent, leading to a severe recession with unemployment reaching nearly 11 percent. Depression-like conditions befell the agricultural sector, a bubble burst in the energy sector, a rolling real estate recession swept the country, the entire thrift industry was badly insolvent and the major money center banks were loaded with third world debt. Some 3,000 bank and thrifts failed, including nine of Texas’ 10 largest, and Continental Illinois, which, at the time, was the 7thlargest bank in the nation. These severe conditions were not only handled without creating a panic, the economy actually embarked on the longest peacetime expansion in history.In Senseless Panic: How Washington Failed America, William M. Isaac, Chairman of the Federal Deposit Insurance Corporation (FDIC) during the banking and S&L crises of the 1980s, details what was different about 2008’s meltdown that allowed the failure of a comparative handful of institutions to nearly shut down the world’s financial system. The book also tells the rousing story of Isaac’s time at the FDIC. With accessible and engaging prose, Isaac: - Details the mistakes that led to the panic of 2008 and 2009
- Demystifies the conditions America faced in 2008, and
- Provides a roadmap for avoiding similar shutdowns and panics in the future
Senseless Panicis a provocative, quick-paced, and thoughtful analysis of what went wrong with the nation's banking system and a blunt indictment of United States policy.
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Showing reviews 1-5 of 19
Untold Story and the Unsung Hero of the financial crisis June 15, 2010
Jay Haley (RICHMOND, TX, US)
9 out of 10 found this review helpful
Bill Isaacs' book may never make the best seller list and that's a shame. While other books tell a story, Isaacs book tells THE story. While other books decipher what federal regulators and officials did wrong, Isaac grasps with great difficulty to find what if anything they did right.
What happened that stopped the meltdown in its tracks and prevented Depression II ? Policymakers will tell you it's the extrodinary measures that they took. And while they may have bought time, the financial markets didn't turn until Congress put a gun to FASBs' ( the board that determines accounting standards )head and demanded they back off mark to market accounting standards imposed in 2007 which had beend suspended since 1938 ( helping end the Great Depression ).
What's wrong with transparency ? Nothing. But imagine being forced to sell your house on Galveston isle AS a hurricane is headed your way. And you have only 24 hours to do it. Is that the fair value of that house ?
Isaac relentlessly hammered Congress and the regulators to bring common sense to the bank accounting standards before it was too late. And they did ( March 2009 ). What followed was one of the biggest market meltups since the 1930s. This allowed markets to become liquid again and banks to begin the process of rebuilding their capital structure.
End result. For now the markets are mending. Altho the final page has not been written. Isaac helped save the hour and gave our capitalist system the chance for another day.
Response to C H Hall June 1, 2010
William Isaac
3 out of 3 found this review helpful
I very much appreciate that Mr. Hall purchased and read Senseless Panic and offered such thoughtful comments, which deserve a serious response. I would explain why the book tends to be "bank-centric," as Mr. Hall points out. It is critcal in a financial crisis for the government to protect the banking system as that is where money is created and is thus the engine of economic growth. The central failure of the government in the 2008 crisis was that it unintentionally induced a panic in the banking system, which caused banks to stop lending even to other banks and threatened a severe economic meltdown. Many members of Congress did not believe the lessons of the 1980s were important -- assuming they knew what they were -- because they were blinded by derivatives, swaps and other such innovations. These innovations increased the risk profile of the system and thus made it more important that the government not allow things to careen out of control in the banking system, which is the glue that holds the entire financial system together. Based upon the current legislative debate, I fear our government leaders still have not learned this critical lesson.
Well worth it June 8, 2010
J (Ohio)
5 out of 6 found this review helpful
This book is a terrific choice for someone who is skeptical of political soundbites and the media's chronic oversimplification, yet doesn't want to delve into a dense economics book. William Isaac is a first-rate teacher who plainly communicates complicated concepts without hype or hyperbole. He drills down to the inter-related, fundamental issues at the core of our country's financial predicament, and then explains the necessary next moves in a very accessible fashion. Mr. Isaac's command of the material, moreover, fosters an economy of words that is both refreshing and appreciated. I learned more in the few hours it took to read this book than I've learned in the past year from newspapers and media.
Insightful and Instructive July 17, 2010
Middle-aged Professor (NY'er living in Ohio)
1 out of 1 found this review helpful
Bill Isaac has an amazing gift for cutting to the chase and explaining in the clearest terms and without condescension the core issues in the banking world to those without financial expertise. His explanation of the events of 1980's crises (when, as director of a key federal agency, he was at the table) and current ones are compelling and instructive. You'll learn far more than you will from reading our leading periodicals and listening to most of the talking heads. The cliche about those who don't learn being doomed to repeat is certainly true in this financial arena, and Isaac's diagnosis is a must read.
"Senseless Panic" by William Isaac July 18, 2010
Chris Rogers
1 out of 1 found this review helpful
Now that the Dodd-Frank's Act has hit its home run and is now awaiting the authority of the President - perhaps its time to genuflect on the political process leading to the Acts final stages and the reason's Congress found it necessary to legislate in the beginning.
On all instances, Bill's book - Senseless Panic - hits many of the correct buttons, and must be seen for what it is, and not as a few commentators have suggested, what it is not - or what the book has failed to cover.
For all who read this post and Bill Isaac's excellent discourse, I shall say this - Senseless Panic and Bill Isaac himself provides a clarion call for change within Washington and the current regulatory environment of finance within the USA.
The remit of Isaac's book is limited indeed, and with good justification, for within its less than 200 pages, Isaac's achieves more in demonstrating what is wrong with America's legislative and regulatory framework than Dodd-Frank's 2,319 pages, for all its original good intent, demonstrates or addresses. Indeed, Dodd-Frank's epitomises what is wrong in Washington and why no meaningful reform can occur unless their is a significant change in mindset.
I believe by dealing with the domestic issues he knows best, Isaac's has laid out a framework by which all can understand the complexities of regulation and the issues regulators are expected to deal with from time to time.
Isaac in his closing pages also shows what is necessary to remedy an unsavory situation, one which has caused immutable harm globally and within the US body politic itself.
Far from ignoring the globalisation of finance, or the ever increasing complexity of finance, Isaac has drawn on an era when finance was far simpler but just as interconnected as it is today - the sums involved in the 80's obviously being less than those today.
Isaac's actually provides a wake up call for all those that believe in the Constitution and the political process that change is possible and that legislators, and indeed bankers, must take responsibility for their actions and there consequences - many of these being contrary to what was actually intended - as reference to the FASB and mark-to-market clearly demonstrates.
Having corresponded at length with Isaac's, Bill Black, laurence Kotlikoff, Lawrence White and numerous other commentators of the mess that was the financial crisis - I can assure readers of Bill's book that his conclusions are inline with a vast body of his peers, both to the left and the right of the political spectrum, and that the actions taken by the supposed leaders in Washington and subsequent legislative process under Obama et al, leaves a bitter taste in many mouths.
By concentrating at a national level, Isaac's demonstrates clearly the expanded problems at dealing with matters at an international level, be this the G-20 or Basel Committee.
At the end of the day, Isaac's demonstrates that the pre-existing 2007/2008 regulatory bodies, Congress and the Whitehouse had enough existing powers to deal with the crisis in a sensible manner, and that after Obama's election, huge change was not necessary to deal with the immediate crisis - political resolve and giving the necessary mandates to all agencies was required though but never materialised.
Instead, the US taxpayer has been left with a bill and legacy exceeding US$13 trillion, and that much of the clean-up Bill was unnecessary if only legislators had not been spooked into taking actions that were diametrically at odds with what was actually necessary.
I ask you all who read this note to review Isaac's book and glean from its pages what I have - should this opinion be contrary to your own views, I also suggest reading an essay penned recently by Peter Wallison of the AEI titled "The importance of narrative," which with Isaac's excellent book clearly demonstrates beyond doubt that the US public has been duped.
My words are those of a European Social Democrat, and not a Republican or Conservative, but, one who understands the benefit of listening to sound counsel, and for all its faults, Senseless Panic provides sounds counsel and should be on all members of Congress's Summer recess reading list - had they had an opportunity to digest Isaac's conclusions prior to the end of June, I'm confident that many more would have rejected the Dodd-Frank Bill and demanded more sensible legislation that addressed the real issues, rather than the meaningless broad brush approach we now have.
Far from providing global leadership, Congress has once more clearly demonstrated why US influence is on the wane, and why it is Wall Street laughing all the way to their overseas off-shore bank accounts and not the average Joe, or for that matter, the well run regional and local bank's which this Act clearly does not support.
Thus, it is indeed correct to call Isaac a true patriot and one the USA should applaud - an honest public servant who has served the Republic and continues to serve the Republic regardless of the political headwinds and corruption spawned by Wall Street and its vast legion of willing accomplices.
Showing reviews 1-5 of 19
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