Bair Leaving FDIC on July 8

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EDITOR’S NOTE: Ms. Bair has been a champion of small banks and an effective and reasonable critic of the large banks. She accurately predicted the problems we face today and was vaulted to national prominence when her dire predictions came true. Now she is writing the rules to “resolve” banks that fail —including the big banks. While we are sorry to see her go, we applaud her service to this country and wish her well in future endeavors.

F.D.I.C. Chairwoman to Leave in July


Sheila C. Bair, one of the banking industry’s most influential regulators and outspoken critics during the financial crisis, said on Monday that she planned to step down as chairwoman of the Federal Deposit Insurance Corporation on July 8.

Ms. Bair sounded some of the earliest alarm bells over the nation’s worsening housing crisis during the boom and then helped orchestrate deals for hundreds of troubled banks when the financial markets collapsed. She has also been a staunch advocate of a controversial federal loan modification program and a prominent voice on the need to rein in too-big-to-fail banks.

Ms. Bair, a Bush administration appointee who was named F.D.I.C. chairwoman in 2006, had been openly discussing her plans to step down when her five-year term expires this summer.

“I don’t think these jobs should be forever,” she said in a brief interview on Monday. “We had a good run here.”

In the near term, Ms. Bair said she would like to serve on corporate boards outside the financial industry and write a book on the lessons she learned during the crisis. Longer term, she said she might be interested in leading a foundation and some day returning to government.

Martin J. Gruenberg, the F.D.I.C.’s vice chairman, is widely expected to take over for Ms. Bair, although he would require confirmation by the Senate first.

With Ms. Bair’s departure, five of the nation’s major financial regulatory agencies will be without permanent leaders. Although Elizabeth Warren was named the acting head of the Consumer Financial Protection Bureau, the Obama administration has not decided whether it will nominate her to fill the slot. Also vacant are the top spots at the Office of the Comptroller of the Currency; and the Federal Housing Finance Agency, and the Federal Reserve’s vice chairman for bank supervision, a new post.

A Republican with a progressive bent, Ms. Bair frequently clashed with fellow regulators in both the Bush and Obama administrations. In banking circles, she was privately derided by Wall Street executives and publicly heralded by smaller banks.

But in Washington, her prescient warning on housing and straight talk on the banks’ troubles made her enormously popular with both Democratic and Republican lawmakers and transformed the once little-noticed agency into a power player in financial policy debates.

Ms. Bair shepherded the F.D.I.C. through one of its most turbulent periods as the number of troubled financial institutions surged and the deposit insurance fund plunged into the red. Since the financial crisis, the agency has overseen the takeover of more than 300 failed banks.

Although the fund still has a negative balance, Ms. Bair was lauded for finding ways to minimize its losses while devising a plan to get it back on track.

Some of Ms. Bair’s other efforts have been more controversial. Her mortgage modification program became a template for a larger federal effort but has faced scrutiny for failing to permanently keep more borrowers in their homes. After a few months, critics say, far too many borrowers re-default on their loans.

Her role in the rescue efforts during the crisis has also come under fire. In the fall of 2008, Ms. Bair was among the top regulators who signed off on stabilizing the banks with tens of billions of dollars of federal money. Later she demanded that Citigroup replace its chief executive as a condition of a second rescue, though she ultimately backed down.

Her rescue of Washington Mutual helped protect the deposit insurance fund, but it engendered a raft of litigation from bondholders, who felt shortchanged and accused the agency of giving JPMorgan Chase a once-in-a-lifetime deal for the teetering bank. Citigroup officials privately sniped that she had unfairly allowed Wells Fargo to pry Wachovia out of their hands.

Those simmering tensions rose to a boil after a Citigroup official called the F.D.I.C. a “tertiary regulator,” prompting the agency to take a closer look at the bank’s financial condition and call for a comprehensive review of the bank’s leadership.

Among Ms. Bair’s final acts will be writing rules requiring the biggest financial firms to plan for orderly liquidations should they face collapse. Last week, she warned of the risks they posed even after financial reform.

“This situation can only be regarded as a new and dangerous form of state capitalism, where the market assumes large, complex and powerful financial companies are in line to receive generous government subsidies in times of financial distress,” she said. “Unless reversed, we can expect to see more concentration of market power in the hands of the largest institutions, more complexity in financial structures and relationships, more risk-taking at the expense of the public, and, in due time, another financial crisis.”

8 Responses

  1. E. Tolle

    Financial settlements that allow continuation of the ongoing abuse. With little restitution to victims.

    WhY??? Because someone else is being paid back for the abuses against YOU.

  2. E. Tolle


  3. On 12/28/2010 William Black said:

    The state attorneys general investigations of foreclosure fraud do focus on the major players such as the Bank of America, but they are unlikely to lead to criminal liability for any senior bank officials. It is most likely that they will lead to financial settlements that include new funding for loan modifications.

    Fast forward to today:

    After months of stalemate, the state attorneys general have proposed new terms to the top five mortgage servicers that drop some controversial provisions of their first attempt at a settlement, including a push to force banks to reduce principal on thousands of mortgages…

    Banks have privately said that they will not agree to a fine above $10 billion — far below a discredited $20 billion figure floated in the press two months ago — arguing that regulators have not provided evidence that servicing problems led to wrongful foreclosures.

    Since when do those under regulation get to decide what they will and will not accept? Is this a joke? Recall Jamie Dimon when he remarked that mortgage writedowns were “off the table!” I personally would like to see Dimon in stocks, no, not the S&P kind, the kind where he’d be shackled in front of JPMC headquarters for all to see, shaming him, if that’s at all possible. I’m not sure those guys are capable of shame.

    Let’s just thank our lucky stars that we’ve got so many regulatory agencies in the U.S. protecting us. Let’s take a look at the stellar performance of these highly paid groups:

    Let’s start with AG Tom Miller, and as far as I can tell, the following goes for the majority of the state AGs as well:

    ~ Tom Miller, the leader of a nationwide investigation of foreclosure fraud told homeowners Tuesday that the probe will have some serious consequences for bankers. “We will put people in jail,” Iowa Attorney General Tom Miller said, according to homeowner advocates present at the meeting in Des Moines.

    Uh…not so fast…turns out Tom has raised $261,445 from finance, insurance and real estate contributors since he announced that he was going to be coordinating the investigation into improper foreclosure practices. That is 88 times as much as they gave him not over last year, but over the previous decade. And it would appear he didn’t actually mean placing people physically in jail….I guess it was more a rhetorical statement?

    ~ But where in the world is AG Eric Holder? Uh, he and Homeland Security Secretary Janet Napolitano were targeting Maricopa County Sheriff Arpaio for his open borders and amnesty for illegal aliens tactics. Goldman Sachs placed a two trillion dollar bet against their very own clients, and Janet and Eric are after after a sheriff? Go figure.

    ~ And then there’s that total embarrassment John Walsh at the OCC. He’s the guy that characterized forged documents and false affidavits as “mishandling” by the banks. And he staunchly supported the fiction that all foreclosures are warranted, and worse, positive. Don’t forget that because of the OCC, homeowners will not be able to file for class action status in suing banks for falsely foreclosing.

    ~ Sheila Bair, ah Sheila, I had such high hopes for you…..and then there was this, “at a housing finance conference sponsored by the FDIC and the Federal Reserve, Bair suggested that a “safe harbor” be provided to lenders permitting foreclosure if some minimum standards are met. She added that she feared that litigation generated by this issue could ultimately be very damaging to the housing markets if it unduly prolongs foreclosures that are “necessary and justified.”

    The only harbor I’d like to see both the bankers and their friendly regulators put into would be Fukushima Bay, shackled to reactor #4.

    ~ OTS? Office of the Stupid? This entire so-called agency needs to be nuked. Appearing at a press conference in 2003, James Gilleran, then head of the federal Office of Thrift Supervision, posed with a chain saw next to a stack of federal regulations in order to demonstrate how “banker friendly” the O.T.S. was, hoping to woo bankers to come under its regulatory umbrella. How could this be, you ask? How could the head of a regulatory agency charged with overseeing savings banks—the bedrock of our faith and trust in the financial system—get involved in this kind of clown act? Because he’s an idiot! Plain and simple!

    ~ SEC’s Schapiro, on the one year anniversary still can’t get a task force together to figure out the flash crash from a year ago….or do they not want to find the methods and culprits due to the vast amounts of monies to be made by those well connected? Just last week she said, “I think their activity that day should cause us to thoroughly examine their current role.” Oh you reckon’? What a novel idea! Have you looked at a calendar lately? Time’s a-wasting! Or how’s about waiting until they crash the whole damned market then look into it?

    ~ Then there’s CONgress, and BIG BANK BACHUS. Alabama Republican Spencer Bachus, the incoming chairman of the House banking committee, says the role of Congress and federal regulators is to “serve” financial institutions. “In Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks,” Bachus told The Birmingham News in an interview. I think Bachus should be kicked out of CONgress and foreclosed on. Oh, and denied food stamps, and energy assistance, which his party is so fond of cutting, while they extend tax cuts to their Masters.

    ~ Don’t forget Geithner and his single handed refusal to allow the distribution of $75 billion dollars from TARP funds that were earmarked for consumer legal aid and homeowner assistance. He’s the biggest reason I back waterboarding.

    ~ Bernanke…U.S. Federal Reserve Chairman Ben S. Bernanke’s two-year fight to shield crisis-squeezed banks from the stigma of revealing their public TARP loans protected…. a lender to local governments in Belgium, a Japanese fishing-cooperative financier and a company part-owned by the Central Bank of Libya.

    The biggest borrowers from the discount window as the program reached its crisis-era peak were foreign banks, accounting for at least 70 percent of the $110.7 billion borrowed during the week in October 2008 when use of the program surged to a record.

    I can’t figure out if he’s a scholar of the Great Depression, or just really fond of Great Depressions, because he’s leading us all into one just up ahead.

    Bill Black went on to say that since the FBI was understaffed with financial crime experts, they sought help from the American Bankers Association, who basically convinced them that they had been defrauded by consumers. OMG & WTF?

    Has anybody noticed that much like the lobster placed in a pot of cold water slowly brought to a boil doesn’t notice the predicament it’s in until it’s butter drawing time and the apron’s tucked in, that that’s the exact situation we find ourselves in with foreclosures and our government, for these regulators and representatives didn’t just get captured overnight. This didn’t happen last Friday. They’ve been planting elitist flags for quite some time.

    What happened to the foreclosure moratoriums, fellow lobsters? Notice how the press is hands off of that issue now? Did the banks suddenly cure their many Linda Greens problem somehow? Are the lost notes now mysteriously accounted for? No more cutting corners? Are they now spending minutes per document verifying the fraud before signing, rather than mere seconds? Are they borrowing fewer notary stamps now?

    Tell me what could have possibly changed from last year when all of the lenders were caught with their pants down foreclosing fraudulently. As Neil has so often remarked here, they’ll just continue with the fraud while the odds are so stacked against getting caught, because they know that even if they do get caught, the judges will allow them to rectify their paperwork without prejudice, much less jail terms and disbarment. The fines are so small compared to the gains; it’s a no brainer for anyone with a criminal bent.

    I have no doubt that if I were to go into court with falsified documents and got caught, I’d be making gravel out of boulders for decades. And although I have to admit to having wet dreams of Blankein, Dimon, Moynihan, and that lizard Mozilo being romanced hard daily by the Bloods and Crypts while serving lengthy prison terms in nasty federal prisons, I’m resigned to the fact that it’ll never happen.

    ~ Last but not least is our great (Bank) Protector In Chief Obama. What an incredible banker stooge he’s turned out to be. Mr. Hope and Change became chief banker’s bitch overnight, as soon as the confetti was swept up from the Capitol’s grounds.

    “An army of financial industry lobbyists is at work wining and dining key legislators, whose elections were funded by millions in campaign contributions from banks, insurance companies, hedge funds, etc. Wall Street lawyers are helping draft the details of regulatory bills in closed-door meetings, while Obama and his top economic advisers—many of whom are former investment bankers and all of whom are longstanding proponents of bank deregulation—confer with the CEOs of the most powerful firms.”

    And there’s not a damned thing Obama will do about it, due to the fact that he lusts after their campaign cash for the next go-round. Don’t think for a minute they’re conferring on how to best serve America! They’re deciding on how to best complete the transformation to the serfdom that is now America. The feudal lords are almost done. Just a few more properties, and they’ll own all the land from Mediterranean Avenue to Boardwalk, from sea to shining sea; with red hotels and cute green houses that used to belong to us, on every corner. And all of these tycoons will be able to live carefree lives as wealthy, non working rentiers within the walls of their gated communities with like minded thieving bastards. Game over. The lobsters are done.

  4. “This situation can only be regarded as a new and dangerous form of state capitalism, where the market assumes large, complex and powerful financial companies are in line to receive generous government subsidies in times of financial distress,” she said. “Unless reversed, we can expect to see more concentration of market power in the hands of the largest institutions, more complexity in financial structures and relationships, more risk-taking at the expense of the public, and, in due time, another financial crisis.”


  5. Wow she was really there a long time must be a job security issue or something?

  6. […] Source: Livinglies’s Weblog […]

  7. Sheila was a lame duck..

    She watched the 60 minute piece, witnessed Fraud first hand (robo singing, and phony notarized docx etc.)

    Yet she never even started an investigation?
    Some Regulator..

    Maybe she will become a lobbyist!

  8. Hi Neil,
    I am not so sure that I am in agreement with you.

    1). First, as the F.D.I.C. head, she was in charge of the transfer of assets of trouble failed banks. This was all done in secret as to what the assets actually were. Then you have the money that was given for free to the banks that bought the trouble failed banks for any losses that arose from the sale of any of the assets.

    2). Second, I have yet to see her office, or any other office, go to the SEC and check any of the Trusts that were created to verify that there were in fact, true sales of ABS and the endorsements are valid.

    Why is it that folks that are being foreclosed upon unlawfully who pay taxes do the job of those that are suppose to protect the system?

    Come on, give me a break….

    Forensic Mortgage Audits and Foreclosure Defense
    Wrongful Foreclosure Sales and Quiet Title

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