The Silicon Valley Bank crisis is 'clearly' a bailout, says former FDIC chairman William Isaac

• William Isaac says the FDIC's handling of Silicon Valley Bank's collapse "clearly" constitutes a bailout.
• "It's not a bailout of the shareholders. They're getting wiped out," Isaac said.

William Isaac, the former chairman of the Federal Deposit Insurance Corporation, said the authorities' handling of Silicon Valley Bank's collapse "clearly" constitutes a bailout.

On Monday, Bloomberg anchor Scarlet Fu asked Isaac about his views on the FDIC taking over Silicon Valley Bank — and whether it should be considered a bailout.

"Well, clearly it is. I mean, it's not a bailout of the shareholders. They're getting wiped out. That's great, and they should be," Isaac said. "And the management and the directors are losing their jobs. That's fine. That's what it should be."

The FDIC insures deposits for up to $250,000 per depositor, per institution, per ownership category.

Isaac added that the Silicon Valley Bank situation is similar to what happened with the Continental Illinois National Bank and Trust Company's collapse in 1984.

The FDIC scrambled to bail out Continental Illinois, injecting $4.5 billion in funds from a loan package provided by 16 banks, per the agency — but it still didn't stop the bank run. Continental Illinois became insolvent in May 1984, and functioned under government ownership until it was sold to Bank of America in 1994.

Isaac added that he, in his role as chief of the FDIC, bailed out smaller depositors when he oversaw the collapse of banks. But Isaac also questioned if the FDIC should go as far with Silicon Valley Bank as it did with Continental Illinois.

"I worry that we're going to do too much to protect too many people that don't — that shouldn't be protected," Isaac told Bloomberg.

Isaac was the chairman of the FDIC from August 1981 to October 1985 and oversaw the agency during part of the 1980s banking crisis. More than 1,600 banks insured by the agency collapsed or had to be bailed out between 1980 and 1994, per the FDIC.

Isaac separately told Politico on Sunday that Silicon Valley Bank's failure will likely spread to more banks.

"There's no doubt in my mind: There's going to be more. How many more? I don't know," Isaac told Politico.

Representatives for the FDIC did not immediately respond to Insider's request for comment outside regular business hours.