This is part of an interview with the former Chairman of the Federal Deposit Insurance Corporation, William Isaac.
Marketplace: Do you agree with Fed Chairman Bernanke and the speech he gave this weekend about the cause of the crisis really being lax regulation?
William Isaac: Ineffective regulation I think is an important contributor to the crisis. I think the government bears a large responsibility for the crisis. Fannie Mae and Freddie Mac were out of control for about the past 20 years — wild growth rates, decreasing their lending standards, under a great deal of pressure from the Congress to do that. The Congress wanted them to loan more, and to lower their standards, so more people could borrow more money, and it had to come home to roost and it has.
Marketplace: What do you think about the regulations that are making their way through Congress now? Are we going to get substantive reform out of this crisis or not?
William Isaac: I think what I've seen so far in the House has been highly ineffective. I've very disappointed in what came out of the House, I don't believe it's meaningful reform. I don't believe it will do anything to prevent another crisis. In fact, it may speed the next crisis. I'm hoping that we can get this thing turned around in the Senate. That the Senate will really have the courage to do meaningful reform that the House has not done.