Former FDIC Chair William Isaac says the government is bailing out banks SVB and Signature Bank. He says he is not worried about the banking sector. He speaks on “Bloomberg Markets.”

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In the wake of the 2008 financial crisis, government bailouts of banks and other financial institutions were a contentious issue. Many argued that these bailouts were necessary to prevent the collapse of the financial system, while others believed they were simply a way to reward reckless behavior and transfer wealth from taxpayers to Wall Street.

One of the most vocal opponents of the bailouts was Sheila Bair, who served as chair of the Federal Deposit Insurance Corporation (FDIC) from 2006 to 2011. In a 2008 op-ed for The Washington Post, Bair argued that bailing out the financial industry would only serve to worsen the problem, rather than solve it.

Bair’s argument was based on the principle of moral hazard, which refers to the idea that if people or institutions know that they will be bailed out if they take excessive risks, they are more likely to engage in risky behavior. In this case, Bair argued, the promise of government bailouts would encourage banks and other financial institutions to take on more risk, rather than being more cautious and responsible with their investments.

In her op-ed, Bair wrote that “the federal government is orchestrating a bailout of the entire financial system, without imposing restrictions on the banks that got us into this mess in the first place.” She argued that the government should instead focus on helping individual homeowners and small businesses, rather than propping up large financial institutions.

Bair’s criticism of the bailouts was not well-received by some in the financial industry and in government. In a later interview with PBS, she recalled being warned by a Treasury official that she was “going to bring down the financial system” if she continued to speak out against the bailouts.

Despite this backlash, Bair continued to voice her opposition to the bailouts and advocate for more responsible financial practices. She pushed for new regulations that would rein in risky behavior and prevent future crises, and she also called for greater accountability for those responsible for the 2008 crisis.

Today, more than a decade after the financial crisis, debates over bailouts and financial regulation continue. But for many, Bair’s principled stand against the bailouts remains an important reminder of the dangers of moral hazard and the need for responsible financial practices.