An opinionated hour-long conversation involving economic tough-talk from former FDIC chairman, economic commentator, and author Bill Isaac drew McDonough School of Business students, faculty, alumni, and staff to a discussion about the 2008 Great Recession, banking, and needed fiscal adjustments, Feb. 6 and 7.
On Monday, the author of Senseless Panic: How Washington Failed America spoke as part of the school’s Distinguished Leaders Series about his experiences and observations of the economic crisis of the 1980s. At that time, there were 3,000 bank and thrift failures, double-digit unemployment rates, an energy-sector bust, and high inflation, he said.
“I look at the current crisis and think, ‘how did we get in this mess?’ We actually had a far less serious problem. In 2007, the economy was doing really well.”
He also spoke with students the following morning at an MBA Leaders Breakfast. He told them that he has witnessed three major economic downturns during his professional career, and he believes that the 2008 financial crisis was comprehensively mishandled.
“It didn’t need to be that bad,” Isaac said of the 2008 recession. “We could have handled it better. We could have had a softer landing. This panic hurt millions of people.”
Some of Isaac’s strongest comments were about banking competition – or the lack of that competition – in the United States.
“The five largest banks control 50 percent of the banking system,” Isaac said. “I’m deeply troubled by that. When they make a mistake, it’s really felt. That is scary because they do make big mistakes. I’m also worried about the political power they hold. It’s not good for the economy and the country to have so much concentrated power.”
As for advice to the MBA students, Isaac mentioned that he wished he pursued an MBA and admitted that his law degree “does come in handy.” He also told the Georgetown MBAs to be honest as they continue their career pursuits.