National Consumers League

Book review: Bair's 'Bull by the Horns'


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By Sally Greenberg, NCL Executive Director
Several weeks ago I dropped by my local book store to hear former Federal Deposit Insurance Corporation (FDIC) Director Sheila Bair read from her new book, “Bull by the Horns.” The place was packed. I had no idea so many people would come out to hear her read and be so eager to talk about the FDIC’s role in the near-collapse of the economy and the sub-prime lending debacle. The FDIC plays a critical role in protecting bank depositors and overseeing the bank to ensure they are making wise investments and their finances are sound. When they are not, the FDIC can also oversee the process of winding down a bank’s business. The agency was created after the Great Depression to prevent a repeat of the run on banks by depositors desperate to get their money out for fear of losing it all. Today the agency ensures most bank deposits up to $250,000. I admit that when I bought the book for the NCL library I thought, “I’ll never get around to reading this; furthermore, it’s probably a snooze.” I opened up the first page, began to read, and was hooked. It reminded me why Sheila Bair was always held in such high esteem in the consumer community during her tenure at the FDIC. She was often a voice in the wilderness, standing by her beliefs that investors--and not taxpayers--be on the hook if a bank or investment firm failed. She was frequently fighting NY Fed and then Secretary of Treasury Timothy Geithner, Larry Summers, OCC’s John Dugan, and the Fed Chairman Ben Bernanke and was often the only woman. As such she was routinely excluded from meetings and decisions involving the other regulatory agencies. Bair paints a picture of her counterparts at the Fed, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, all financial heads of agencies – especially Geithner – as being more interested in protecting the big banks and Wall Street, rather than taxpayers, especially Citibank, where Geithner had close ties. Geithner, Bair says, was often eager to commit FDIC’s funds to help bail out firms that had engaged in high risk lending and slip shod investment practices. Bair resisted them at different times, and though she chose her battles carefully, they pilloried her for it. She also compromised more than she felt comfortable doing, if only to be a team player and put in place stronger standards in place for risk-taking among financial institutions. The expression that “Wall Street wants risk socialized and profits privatized” applies never seems more fitting than when reading Bair’s book. I highly recommend it. It has some good Washington gossip and more than a few glimpses inside the world of the Washington financial regulators. Her meetings with President Obama are far more positive than her interactions with his appointees. It makes you wonder why the President put Wall Street types like Geithner and Summers in charge of agencies that needed an independent, fair-minded regulator. If I ever run into that guy named Barack Obama, I’m going to recommend he read the book and think about Sheila Bair for Secretary of Treasury. That would be a great appointment.