9 Critical Insights About Banking From Former Wells Fargo CEO Richard Kovacevich

By Fool.com

One Wells Fargo Center in Charlotte, N.C.

Four years ago, one-time FDIC chairman William Isaac sat down with former Wells Fargo chairman and CEO Richard Kovacevich for a wide-ranging conversation about banking and the financial crisis. It's one of the best interviews about banking that I've come across in the last three years.

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It would be an understatement to say that these two men know a thing or two about the subjects at hand. Isaac led the FDIC during the tumultuous 1980s, when thousands of banks fell prey to an unprecedentedly severe interest-rate environment. And thanks to Kovacevich's leadership, Wells Fargo was positioned to exploit the crisis of 2008-2009 by, among other things, doubling in size thanks to the bank's 2008 acquisition of Wachovia.

While the interview covered a lot of ground -- here's a link to the full transcript if you're interested -- I've pulled out the nine most important points made by Kovacevich in response to Isaac's questions.

1. The riskiest part of banking is lending

2. The importance of spreading risk

3. Size alone doesn't matter

4. The biggest mistake of the financial crisis

5. Ineffective regulation is worse than no regulation at all

6. On TARP

7. Only about 20 financial institutions caused the financial crisis

8. Why banks fail

9. The fine line between risk and reward

The article 9 Critical Insights About Banking From Former Wells Fargo CEO Richard Kovacevich originally appeared on Fool.com.

John Maxfield has no position in any stocks mentioned. The Motley Fool recommends Wells Fargo. The Motley Fool owns shares of Citigroup Inc and Wells Fargo and has the following options: short April 2015 $57 calls on Wells Fargo and short April 2015 $52 puts on Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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