FDIC's Bair: Don't Look at Us, It's Not Our Fault!

Of the four horsemen of the financial apocalypse (Mary Shapiro, Ben Bernanke, Sheila Bair, and Tim Geithner, of course), Sheila is the only one who I have the slightest amount of faith in. She's got her head screwed on straight and one hell of a shitty job, which might explain why she's out at the end of her term. Were Bernanke half the brainiac she is, he'd follow suit and say screw a Senate confirmation instead of sending his loyal minions to evangelize his greatness.

South Florida Business Journal:

Reacting to President Barack Obama’s recent proposal to impose limits on the size and scope of banks, Federal Deposit Insurance Corp. Chair Sheila Bair said during a visit to Miami Monday that institutions should wall off their non-bank financial activities from their insured deposits.

On Thursday, Obama said he wants to prevent financial institutions that own a bank from also owning, investing in or sponsoring a hedge fund, private equity fund or proprietary trading operations that are not related to serving their customers. The president also said that large financial firms could not increase their national market share of assets other than insured deposits beyond a certain point.

Just before speaking to the Florida Banker’s Association on Monday night, Bair said she hasn’t seen enough details of Obama’s proposal to say whether she supports it or not. She said financial institutions could do a better job of walling of their FDIC-insured banks from some of their more risky financial activities so that the banks aren’t hurt by losses in those areas.

“The bulk of these problems actually occurred outside the insured deposit banks. Just look at Lehman Brothers and AIG,” Bair said.

Wait for it.

Bair, who plans to leave office after her term expires at the end of this year, said the number of bank failures this year should exceed the 140 failures that occurred in 2009. Fourteen of those bank failures occurred in Florida. The FDIC has projected that bank failures would cost its insurance fund about $100 billion from 2009 through 2013.

Since some of the troubled banks are fairly small, Bair said the FDIC might package them to attract more bidders.

As we already know, Obama's proposed bank reforms might make it harder for the FDIC to unload crap assets that no one else wants so we can go ahead and guess that Sheila isn't going to support the move because wild speculation is generally the way to go when you're talking about financial doomsday.

This might be an excellent time to go all shameless self-promotion and remind you all that the Bank Fail Friday team is on duty as always bringing you all the hot bank failure action each and every Friday, even if that means from my BlackBerry on the ride home from work. Tricky FDIC bastards.

Jr Deputy Accountant

Some say he’s half man half fish, others say he’s more of a seventy/thirty split. Either way he’s a fishy bastard.


It was all Sheila Bair's fault, lol. She should've been fired in 2008, but the government doesn't fire people and hence this big friggin mess. She has no banking experience and would've had her butt handed to her in the private sector for such ineptness.

The FDIC, along with FRB, OTS, NCUA, state regulatory agencies, etc. had no clue what an MBS or CDO was and therefore didn't scrutinize them.

All these financial system assets were under their regulatory oversight. FDIC, then NCUA, blew smoke at Congress and CYA'd by saying they didn't have "systemic risk authority". They had 100% authority. What a bunch of bs...