FDIC leader's departure is savers' loss
It’s a shame Sheila Bair will leave the FDIC on Friday.
Her departure will be a loss to those of us who invest our savings in government-insured savings and CD accounts.
It’s not that I’ve agreed with everything Bair has said or done during her tenure.
For example, the FDIC’s decision in October 2008 to go along with the Treasury and the Fed and invoke the "systemic risk" provision of the 1991 Federal Deposit Insurance Corporation Improvement Act, guaranteeing billions in debt of nonbanking companies like Goldman Sachs and GE Capital, was a travesty.
And I think her current confidence that the Dodd-Frank Act should successfully end "too big to fail" is questionable. (More on that in future posts.)
But at least she’s given me the feeling that she’s actually a regulator, not just a mouthpiece for Wall Street.
"Bair has consistently stood out for her skepticism of Wall Street and for her eagerness to confront the big banks," concluded a July 2009 New Yorker piece entitled "The Contrarian."
The article attributes her often activist regulatory posture, in part, to her Kansas Republican background, harkening back to William Allen White, the Emporia newspaper publisher prominent in the Progressive wing of the Republican Party in the early 1900s.
Whatever their origins, I found her straightforward views, expressed in interviews during and after the financial crisis, a welcome contrast to the awkward bombast of Hank Paulson and the slipperiness of Ben Bernanke and Tim Geithner.
Hopefully, her successor at the agency will adopt her approach to bank regulation.
Bair recently gave a speech before the National Press Club in which she lamented "short-termism" in our financial system.
I applauded (figuratively) her observation that "too often, the response to subpar economic growth has been…a cut in interest rates that feels good for a while but does nothing to enhance the long-term performance of our economy.”
This got me thinking that Bair would be an ideal candidate to head the Fed.
We could use someone there who has some notion of the impact of monetary policy on savers. Her background at the FDIC would be ideal.
Of course, we’d have to convince Bernanke to step down.
Maybe we could arrange this by establishing a fund to enable him to retire and write his memoirs in the peace and quiet of Princeton, N.J.
I’ll contribute $100.
Anyone else interested?
Follow Interest.com on Twitter.