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This isn't a travel blog, but William Isaac has nothing positive to say about Basel.
“Nothing good goes on there,” he warns prospective visitors. “It's not a place you'd care to take your family.”
Of course, Isaac's views are really aimed at what happens when central bankers converge on the small Swiss city and create banking rules that harm economic growth.
Isaac, the former chairman of the Federal Deposit Insurance Corp. and chairman of Fifth Third Bank, recently spoke at the Speaker's Assembly of Southwest Florida in Bonita Springs and he didn't mince words about the current state of bank regulation.
The global banking rules that central bankers are formulating in Basel will further constrain banks' lending ability, Isaac warns. Already, he says overzealous government regulators and accounting rule-setting boards have forced U.S. banks to eliminate $4 trillion in lending capacity.
“They're forcing the banks to retrench. Bank loans are being retrenched now, that's the reason we're having such a sluggish recovery,” Isaac says.
Isaac says he's especially concerned that community banks will disappear under the weight of additional regulations emanating from Basel and elsewhere. “It's going to be very hard on the community banks,” he says.
But don't count Isaac in the no-regulation camp. “I'm not some nutcase that thinks all government is bad,” he says.
Isaac says he's in favor of bank regulation that follows common-sense rules such as making sure that banks are well diversified in their assets and have strong capital positions. “Proper bank regulation is not rocket science,” he says.
So how do you turn the tide, someone in the audience asked. “We need to throw out these people who brought us these problems,” Isaac says. “We're going to have to get involved in campaigns. I'm getting politically involved for the first time in my life.”
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