10.01.12 7:04 PM ET
Former FDIC Chairman Sheila Bair Dishes (Video)
Sheila Bair, chairman of the Federal Deposit Insurance Corporation, is a member of a very small club: competent crisis-era financial regulators. Bair was one of the policymakers in Washington in the 2007–2009 period who was ahead of the curve. From her perch at the FDIC, where she was charged with safeguarding the nation’s bank deposits, Bair had a front-row seat to the housing/credit boom and the spectacular bust.
The officials in charge at the Federal Reserve and the Treasury Department—Ben Bernanke, Henry Paulson, Tim Geithner—have been placed at the center of the many crisis narratives. But Bair and the FDIC deserve better billing. While the crisis originated in banks that were not part of its system—so-called shadow banks like Lehman Brothers, Countrywide Financial, and AIG—the FDIC played an important role in stemming the panic in 2008 and 2009. In the middle of the crisis, for example, the FDIC expanded the levels of deposit available for insurance and set up a program through which it guaranteed more than $300 billion of debt issued by financial companies.
In her comprehensive new book, Bull by the Horns: Fighting to Save Main Street From Wall Street and Wall Street From Itself, Bair recounts her experiences at the FDIC, her frequent run-ins with banking executives, and with officials such as Treasury Secretary Tim Geithner.
In our extended interview, Bair discusses the historic bailout and the still-current issues surrounding banking reform, the size and influence of Wall Street, and the still-incomprehensible failure of the Obama administration to deal decisively with the housing and foreclosure crisis.
It’s worth noting that Bair was one of the only figures in Washington to emerge from the crisis with her reputation intact, and indeed, burnished. Hundreds of failing and faltering banks failed and were closed, with little disruption to customer service. No depositor lost a single penny in insured deposits, despite the worst banking crisis since the early 1930s. The debt insurance program collected several billion dollars in fees without having to make any payments. And the insurance fund run by the FDIC is replenishing itself without having to dun taxpayers. For better or worse, the banking system is now in relatively good health.