— FDIC Chairman Sheila Bair in a speech at Georgetown University, 2009, contemplating borrowing from the Treasury to replenish depleting funds
The recession left many without jobs and with a lot of time on their hands. But Sheila Bair, Chairman of the Federal Deposit Insurance Corporation (FDIC) has hardly had breathing space ever since the global financial crisis toppled some of the world’s most prominent banks. The role of the FDIC is to protect consumers against the loss of their insured deposits if an FDIC-insured bank or savings organization fails. As the U.S. monetary system undergoes a root-wrenching overhaul, Bair has become the voice of ordinary passbook holders.
A native of Independence, Kansas, Bair is a philosophy graduate from the University of Kansas, later acquiring a JD from the University of Kansas School Of Law. She began her career in the General Counsel’s office of the former U.S. Department of Health, Education and Welfare, and furthered her political skills as Counsel to Kansas Republican Senate Majority Leader Robert Dole during his campaign. Bair soon after quickly rose to the position of Senior Vice President for Government Relations of the New York Stock Exchange before becoming the Assistant Secretary for Financial Institutions at the U.S. Department of Treasury.
Bair was teaching Financial Regulatory Policy at the University of Massachusetts, Amherst, when she was asked to take over the five-year chairmanship of the FDIC in 2006, slightly before the first whiff of trouble arose in the U.S. financial sector. Her acceptance of the post was met with wonder and surprise. The FDIC was hardly ever mentioned anywhere in the papers, it had little to do, and the fund was so full that many banks no longer had to pay in premiums. But the scenario quickly changed. Currently, the fund has dwindled so much that Bair is considering all options including borrowing from the Treasury. The FDIC has handled the closure of 92 banks this year alone, and it estimates that these bank failures will cost the fund around $70 billion through 2013.
Looking back, Bair was one of the first government officials to notice the subtle warnings, recognizing the problem of subprime loans. At an investor conference in Manhattan in 2007, Bair commented, “More needs to be done, and done sooner rather than later,” as she called for a consolidated effort to restructure shaky loans and mortgages for troubled homeowners.
Yet, her perseverance, prudence and foresight earned her second place on Forbes’ list of 100 Most Powerful Women in 2009 as well as in 2008. Bair has been seen as a consumer champion ever since she protected the savings of hundreds of thousands of people by handling 25 bank failures in 2008 alone. To boost consumer confidence and trust, she also bolstered the guarantee from $100,000 to $250,000. “No customer has ever lost a penny of insured deposits,” she insisted with pride.
Bair’s belief that sound financial management begins at home has led her to author two children’s books. In “Rock, Brock and the Savings Shock”, a book about twin boys who get money from their grandpa, the lesson is clear – “You just have to stop spending all your money and save.” This time around, it appears that people just might listen when Sheila Bair speaks.
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