Sheila Bair’s Bank Shot

[elleng]

The rap on her was always that she was “difficult” and “not a team player.” There were times, in Congressional testimony, when she disagreed with her fellow regulators even though they were sitting right next to her. Her policy disputes with other regulators were legion; in leaked accounts, Bair was invariably portrayed as the problem. In “Too Big to Fail,” for instance, the behind-the-scenes account of the financial crisis by the New York Times business columnist Andrew Ross Sorkin, Bair is described as one of Geithner’s “least favorite people in government.” As Paulson, Geithner and the Federal Reserve chairman, Ben Bernanke, raced to bail out banks and companies like A.I.G., Bair resisted, fearing that they were being overly generous by putting the interests of bondholders over those of taxpayers. I couldn’t help recalling that the last female financial regulator to be labeled difficult was Brooksley Born, the head of the Commodity Futures Trading Commission in the mid-1990s. Fearful that derivatives were becoming a threat to the financial system, Born wanted to regulate them but was stiff-armed by Alan Greenspan and Robert Rubin.

http://www.nytimes.com/2011/07/10/magazine/sheila-bairs-exit-interview.html

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The boys just can't handle smart 'girls,' and, as ever, we'll ALL suffer for it.

[hay rick]

1. Bondholders...

From the article:

"As she thinks back on it, Bair views her disagreements with her fellow regulators as a kind of high-stakes philosophical debate about the role of bondholders. Her perspective is that bondholders should take losses when an institution fails. When the F.D.I.C. shuts down a failing bank, the unsecured bondholders always absorb some of the losses. That is the essence of market discipline: if shareholders and bondholders know they are on the hook, they are far more likely to keep a close watch on management’s risk-taking.

During the crisis, however, Treasury and the Fed were adamant about protecting debt holders, fearing that if they had to absorb losses, the markets would be destabilized and a bad situation would get even worse. “What was it James Carville used to say?” Bair said. “ ‘When I die I want to come back as the bond market.’ ”

“Why did we do the bailouts?” she went on. “It was all about the bondholders,” she said. “They did not want to impose losses on bondholders, and we did. We kept saying: ‘There is no insurance premium on bondholders,’ you know? For the little guy on Main Street who has bank deposits, we charge the banks a premium for that, and it gets passed on to the customer. We don’t have the same thing for bondholders. They’re supposed to take losses.” (Treasury’s response is that spooking the bond markets would have made the crisis much worse and that ultimately taxpayers have made out extremely well as a consequence of the government’s actions during the crisis.)"

Excellent article. Recommended.

[some guy]

2. hey.

That's exactly the part I just copied to paste into my comments.

If taxpayers have "made out extremely well" why is unemployment somewhere between 9 - 15 % Why are so many homes foreclosed? Why are there so many homeless? Why are banking executives still reaping lavish bonuses?

Geithner deserves to be hanged for treason. As long as his friends aren't harmed, "everything" is fine.

:grr:

[girl gone mad]

4. Taxpayers made out poorly.

It's just part of the big lie designed to disguise Wall Street's massive looting.

[Demeter]

3. Anybody Who Is Contemptuous of Geithner is a Friend of the Nation

and deserves a medal. And Geithner's job.

[Paka]

5. AMEN!

I'll take the medal, but I don't want his job. Sheila can have that. :patriot:

[Chan790]

6. You can have the medal, I'll take his job.

Just to let everybody know who I really am, I'm going to put my framed picture of John Maynard Keynes on my desk and give press conferences from my office in front of a painting of John Maynard Keynes. Maybe I'll get ties with little Keynes heads embroidered on them.

People will say "Wow, he must be a Keynesian!"