“U.S. banks have improved their finances to the point that their capital positions are better than at any time in more than 40 years, former FDIC Chairman William Isaac tells Newsmax TV in an exclusive interview. However, he adds that the Federal Reserve’s ultra-low interest rate policy poses problems for the industry.
“Banks have done really well over the past year, and that’s because they have rebuilt their balance sheets,” says Isaac, now senior managing director of FTI Consulting. “Their capital is stronger than it’s been in my career [more than 40 years]. They’re doing really well.”
The KBW Bank (stock) Index has soared 21.8 percent during the past year.
But that doesn’t mean banks are on easy street, Isaac says. First, the near-record-low level of interest rates makes it hard for them to make money, he says.
In addition, much of their recent income has stemmed from the release of the plentiful loan-loss reserves they built up during the 2008-09 financial crisis and its aftermath….”