FDIC's Bair Wants Broad Authority To Ban All Future Bailouts
The FDIC's head honcha, and lone voice of reason among bank regulators in Washington, Sheila Bair has been extremely busy. And it's good news for taxpayers across the board. We have the details (3 articles) from the just-concluded Reuters Financial Summit plus new video.
On Tuesday, Bair and the other 4 board members voted unanimously to terminate the FDIC's debt-guarantee program, which has been a lifeline for failed financial institutions and their automotive brethren (Hallelujah).
- U.S. regulators voted on Tuesday to end a government program that guarantees some debt issued by banks, but also to set up a 6-month safety net facility. All five members of the Federal Deposit Insurance Corp panel of regulators voted to end the Temporary Liquidity Guarantee Program, or TLGP, on October 31, as planned.
- Debt could be issued and guaranteed under that program up until the deadline. The guarantee on that debt would expire no later than December 31, 2012.
- "It should be clear that this is not a continuation of the program but an ending of the program," FDIC Chairman Sheila Bair said at an open meeting.
- But the program leaves open a 6-month safety feature for institutions suffering from market disruptions beyond their control. Under the 6-month facility, subject to approval, a bank's senior unsecured debt issued after October 31 would be guaranteed through April 30, 2010, the FDIC said.
- Participation under the 6-month safety net could also be more costly, depending on the risk level.
- As of October 14, there was $309.4 billion in FDIC-guaranteed debt outstanding.
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On Wednesday, she reiterated her call for legislative resolution authority to seize any troubled institution regardless of size and place that firm into receivership, while holding the creditors (bank bondholders) financially responsible for their misjudgement (Hallelujah Part 2).
She went so far as to request specific legislative language precluding even temporary bailouts, which Treasury (Geithner) has opposed (on grounds that they won't be able to help their friends if such legislation is passed.).
From a 2nd Reuters article
- Congress should eliminate any possibility of temporary bailouts in draft legislation that would give the government power to break up troubled, systemic financial firms, a top U.S. bank regulator said on Wednesday.
- Bair said the Obama administration's draft bill could be strengthened to eliminate the possibility of any "open bank" assistance, which would be another deterrent for growth.
- "I think we need to make it clear it's a resolution mechanism, not an organized bailout mechanism," Bair said.
- The administration plans to send a tougher draft bill to Congress in the coming days, but has not detailed the changes.
- Bair has been a strong advocate for measures that could combat the moral hazard of "too big to fail." She said financial firms and their investors and creditors cannot make judgments based on the belief that government will step in to insulate them from their mistakes.
- The resolution regime laid out in the administration's original proposal softened the prospect that a large firm could be subject to a government-driven dismantling if it runs into severe trouble.
- That proposal would have given Treasury the power to decide whether to first try to stabilize a large failing firm before appointing the Federal Deposit Insurance Corp as a conservator to unwind the institution.
- "On an individual institution basis, I do not think you should make capital investments, provide credit support, do any of that," she said. "I think if a bank gets in trouble or any large financial organization gets in trouble because of its own mismanagement, I believe it should be put in to receivership."
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Also Wednesday from the Reuters Summitt, Bair called on Wall Street to suspend bonus payments at least temporarily (fat chance hallelujah).
From a 3rd Reuters article
- "It distresses me," Bair said, referring to news that some large financial institutions are returning to pre-crisis bonus levels. "I think it is in the enlightened self-interest of these large financial organizations to, you know, suspend these outsized bonuses at least, if not permanently, (and) realign compensation to more rational levels, shall I say."
Though she seems to understand that it's not likely:
- Bair, speaking at the Reuters Washington Summit, said policing pay through regulation is very difficult and it is not the government's role to micromanage pay.
- "Some of it is just you're going to have to rely on the industry's own self-restraint, and unfortunately a lot of them don't seem to be too self restrained right now," she said.
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Video: Sheila Bair Interview with Reuters Broadcast October 21, 2009
Watch (don't click unless you're coming from our email letter)
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Oct 22, 2009 at 4:45 AM
Reader Comments (21)
http://www.reuters.com/article/summitNews2/idUSTRE59K64T20091021
http://dailybail.com/display/Search?searchQuery=sheila+bair&moduleId=4521698
http://www.reuters.com/finance/summit/Washington09
http://www.reuters.com/article/ousivMolt/idUSTRE59J61F20091021
Geithner at Reuters Washington Summit...transcript
http://www.reuters.com/article/newsOne/idUSTRE59J65V20091021
Geithner says core TARP programs ending
http://www.reuters.com/article/newsOne/idUSN2045976220091021
http://www.reuters.com/article/newsOne/idUSTRE59K5L520091021
Summers: U.S. economic recovery on track
http://www.reuters.com/article/Washington09/idUSTRE59K5O120091022?pageNumber=2
http://www.reuters.com/article/Washington09/idUSTRE59K66K20091021
IMPORTANT
http://www.reuters.com/article/ousiv/idUSTRE59K5E920091021
http://www.bloomberg.com/apps/news?pid=20601087&sid=aJ8HPmNUfchg
Related to Bair's call...
http://www.guardian.co.uk/business/2009/oct/21/executive-pay-bonuses-goldmansachs
Try not to destroy your monitor....
http://www.businessinsider.com/david-einhorn-at-value-investing-the-lesson-of-lehman-is-that-there-shouldnt-have-been-a-lehman-2009-10
http://online.wsj.com/article/SB10001424052748704500604574483222678425130.html
http://www.scribd.com/doc/21382969/Speech-406
She started out making sense, and I like that Geithner hated her, because any enemy of Geithner is a friend of mine.
But then she started sounding like another toxic trash hawker, so I am still out on the jury deliberations on Bair.
I trust the current take from the Daily Bail to tilt the scales, but just to add some "weighing in" ... on Bair:
http://letthemfail.us/index.php?s=Bair&option=com_search
-WM
Posted October 23rd, 2009 by xntryk1
There is no question that our government is controlled by the unelected that lurks behind the scenes or are appointed as bureaucrats to run our country. It was never more evident than when administrations changed last January. Team A replaced Team B, all of whom just happen to be members of the Council on Foreign Relations, the Trilateral Commission and the Bilderberg Group. There is no debate. There is only one plan and that is for one-world government. These are the Illuminists who will Shepard us into final bondage. This is what our government is all about today and has been since WWII.
The heart of the elitist control mechanism is the Federal Reserve and the Treasury Department. Control of our country emanates from these two entities. They control the purse strings of our nation. They allow us to pay for our own destruction. This is achieved by taxation and debt. The system in place has been used for centuries to keep control over people. The elitists want total power over us and all the inhabitants of the world.
Their plans to bring down the world’s economic and financial structure is well underway. The problem is that the public has begun to discover what they are up too via talk radio, the Internet and publications such as the International Forecaster. That has caused the elitists to accelerate their plans and that has opened the window of opportunity for us.
This is why now it is the appropriate time to pass HR1207 and SB604, bills to audit and investigate the Federal Reserve. Once the public discovers what these elitists have been doing to the American people for almost a century, they will disband the Fed and turn its job of monetary policy back to the Treasury where it was placed by our Constitution. This way we will have control and transparency. The next step will be to close the revolving door between Wall Street and Washington.
http://theinternationalforecaster.com/International_Forecaster_Weekly/The_Fed_At_The_Heart_Of_Control_Of_Our_Country
Watch this clip
http://www.youtube.com/user/TheAlexJonesChannel#p/c/176BE6231994A4B7/13/jQWDhA5ZLkg
I have always had mixed feelings about Bair as well...she sounded some alarm bells but wasn't appointed until 2006 so she didn't have much time to wake the flock up...so she can't be placed in the category of regulators who over-saw the risk buid-up...at the same time she hasn't been loud enough in her call to make bank bondholders pay...
Their plans to bring down the world’s economic and financial structure is well underway. The problem is that the public has begun to discover what they are up too via talk radio, the Internet and publications such as the International Forecaster. That has caused the elitists to accelerate their plans and that has opened the window of opportunity for us.
This is why now it is the appropriate time to pass HR1207 and SB604, bills to audit and investigate the Federal Reserve. Once the public discovers what these elitists have been doing to the American people for almost a century, they will disband the Fed and turn its job of monetary policy back to the Treasury where it was placed by our Constitution. This way we will have control and transparency. The next step will be to close the revolving door between Wall Street and Washington.
We've all heard it a million times. America is the "Land of the free and home of the brave."
Is it? Is it really?
I've had people write to me and tell me they agree with this campaign to Kick Them All Out but they are afraid to sign on, make themselves known for fear of ending up on some list. I had a good friend tell me the same thing one day while talking on the phone. He confessed that he was afraid our conversation was being listened to by the government and that he may end up on some list. He wasn't shaking in his boots scared. It was more of a "Big Brother is watching" sense in the back of his mind but it was there nonetheless. It was a definite concern that should never have been in his mind in the first place. This is supposed to be a free country, isn't it?
We Are Either Going to Fall To Tyranny Or We Will Conquer It
http://kickthemallout.com/