OK, I admit it - the Blame Game is often petty, annoying and almost always Unbecoming. But that's only when insignificant people assign it to inconsequential events. The current Credit Crisis can be a lot of things but its definitely not inconsequential. Former FDIC Chairmen can certainly be a lot of things but they're also most definitely not insignificant. Quite to the contrary + due to their banking system 'powers', they're in fact perhaps the most influential and important officials in the WORLD. With that said, former U.S. FDIC Chairman William Isaac believes that the SEC deserves the most blame for the banking system's recent meltdown. He also has very strong feelings on the SEC's 2006 decision that required banks to value their assets using the ' Mark To Market ' accounting method vs. the previous practice of ' Fair Value ' accounting. Check out the below link which contains the CNBC video interview...some quoted excerpts below:
http://www.cnbc.com/id/27100454
"...The SEC has destroyed $500 billion of bank capital by its senseless marking to market of these assets for which there is no marking to market, and that has destroyed $5 trillion of bank lending...That’s a major issue in the credit crunch we’re in right now. The banks just don’t have the capital to start lending right now, because of these horrendous markdowns that the SEC’s approach required...Once they declare that there’s a 'systemic risk', the FDIC at that point can say that we’re going to protect all general creditors when a bank fails. If they do that, then I think the banks will start lending to each other again...It’s just a lack of confidence, because we don’t know which banks are going to go next. And banks we never thought would go, have gone, and we don’t know how the government’s going to handle them..."
Data Courtesy: CNBC
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