Ex-Regulator and New York Banker Establish Advisory FirmMarch 27, 2020 - Articles
William Isaac, a former chairman of the Federal Deposit Insurance Corp. and of Fifth Third Bancorp, and Howard Milstein, a prominent New York banker and real estate developer, have formed a strategic advisory firm specializing in corporate governance, risk management and compliance for the global financial sector.
“The key service is consulting on what risks banks face and how to guard against risks and minimize the effects,” said Isaac, who is co-chairman, along with Milstein, of the Isaac-Milstein Group.
According to a March 12 announcement, they aim to “offer critical guidance and counsel to institutions in today’s rapidly evolving global regulatory and competitive environments.”
Their timing coincided with the coronavirus crisis, but Isaac said he did not want to “oversell” on that specific issue. Expertise would be sought from outside if required.
He did recently co-write, with Thomas Vartanian of the program on Financial Regulation & Technology at George Mason University’s Antonin Scalia Law School, “How Regulators Can Kick COVID-19’s Bank Shock into Remission,” for American Banker’s BankThink. They contend that the banking system was hobbled in the 2008 crisis by mark-to-market accounting rules, and that the now-unfolding current expected credit loss (CECL) standard is “another form of mark-to-market accounting . . . [that] is almost certainly going to diminish longer-term bank lending at the worst possible time.”
“Long Track Record”
“I have a long track record in this field. I know most of the risks,” said Isaac, citing involvement in such areas as banks’ dealings with governments, and how risks are addressed in board governance and senior-executive-level oversight.
An Ohio State University law graduate, Isaac was general counsel of First Kentucky National Corp., a bank holding company, before President Jimmy Carter appointed him to the FDIC board in 1978, at age 34. He was elevated to chairman by President Ronald Reagan in 1981 and served until 1985, his tenure marked by significant financial industry upheaval and reforms, and bank and thrift institution failures.
Isaac moved on to law firm Arnold & Porter; founded consulting firm Secura Group, of which Arnold & Porter was a founding partner; and sold Secura to FTI Consulting, where he stayed on as senior managing director from 2011 through 2019.
He was chairman of the regional banking group Fifth Third from 2010 until 2014, when he reached the mandatory retirement age.
“Bill has an impeccable reputation for integrity and is among the most experienced leaders in the world when it comes to financial regulation, compliance and risk management,” said Milstein, chairman, president and CEO of New York Private Bank & Trust and its operating bank, Emigrant Bank.
“Our experience in these areas will prove invaluable to institutions worldwide as they confront a world where financial security, transparency and regulatory risk management is paramount,” added Milstein, who also has real estate development, merchant banking and philanthropic interests.
Isaac has joined the board of New York Private Bank & Trust and Emigrant and is chairman of two other entities under the NYPB&T umbrella: Sarasota Private Trust Co. (Isaac resides in that Florida city) and Cleveland Private Trust Co. They plan to add more trust companies to the group.
Isaac-Milstein said more information about its growth plans will be forthcoming. Isaac said in an interview that it will be looking for people or groups who can grow with management assistance and capital. “We know what the good firms are. We’re not going to hire 40 people. We don’t have that appetite,” he said.
“Our goal is to provide a level of service to the financial and corporate community that is unmatched,” said Richard Wolf, a governance, risk and compliance expert who has joined Isaac-Milstein as managing director.
The firm is stressing “deep hands-on experience in strategic planning, risk management, information governance, organizational culture, business ethics and regulatory compliance,” and serving financial institutions and their boards, domestically and internationally, along with central banks and regulatory agencies.
Banks “face heavy fines and damaged reputations if they do not proactively nurture corporate culture, as well as measure and remediate compliance weaknesses,” Isaac-Milstein noted in its announcement. “The Isaac-Milstein Group will also focus on data security issues and global financial transparency in a world where the stability of economic systems depends upon the trust companies build with their shareholders, regulators, creditors and clientele.”