Sheila Bair

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Sheila Bair

Moe Tkacik | April 7, 2009, 6:12PM

FDIC Chairman Sheila Bair has been under attack recently in various quarters of the crisis blogosphere in a campaign that culminated this morning in a critical New York Times column today by Andrew Ross "Let Those AIG 'Brainiacs' Keep Their Bonuses" Sorkin, who takes issue with her agency's agreement to guarantee all the non-recourse loans Treasury's toxic asset buyout plan is promising private investors to leverage their bets.

So how much does the F.D.I.C. think it might lose?

"We project no losses," Sheila Bair, the chairwoman, told me in an interview. Zero? Really? "Our accountants have signed off on no net losses," she said. (Well, that's one way to stay under the borrowing cap.)

By this logic, though, the F.D.I.C. appears to have determined it can lend an unlimited amount of money to anyone so long as it believes, at least at the moment, that it won't lose any money.

Here's the F.D.I.C.'s explanation: It says it plans to carefully vet every loan that gets made and it will receive fees and collateral in exchange. And then there's the safety net: If it loses money from insuring those investments, it will assess the financial industry a fee to pay the agency back.

So what's the problem here? It's not as if Bair is afraid to project a loss for her agency. The biggest concern about the plan is that it will enrich Wall Street at the expense of real prices -- especially if banks use the funds to bid up each other's bad loans as envisioned by this blogger we read on Felix Salmon's blog:

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Topics: Sheila Bair

Bob Dole: Bank Nationalizer Sheila Bair Putting The"Compassion" Back In Conservativism

Moe Tkacik | March 27, 2009, 6:46PM

One of the great ironies of this financial crisis (and there are lots) is that the only financial regulator remotely capable of inspiring confidence in anyone is a Republican Bush appointee who's gone largely ignored by the White House since Tim Geithner reportedly tried to push her out of her job for not being enough of a "team player." We speak of course of FDIC Chairman Sheila Bair, who has gotten so much practice nationalizing financial institutions since the crisis began she let 60 Minutes come watch and record one for a segment earlier this month. And now she's been pushing for the authority to take her operation to the likes of AIG, Bear Stearns and the rest of the Too Big To Fail cartel. (And as finance blogger Felix Salmon explained in the New York Times today, she may get her wish as part of Geithner's public-private toxic asset buyout plan.)

On Wednesday Bair went on the hyperconservative supply-side pundit Larry Kudlow's CNBC show to sweetly explain why, when a company like AIG fails, she ought to be able to

come in, repudiate employment contracts, pick and choose who you want to keep, who you want to get rid of, what you want to pay them. Replace the management, get rid of the boards, bring in better management and do an orderly unwinding of the entity.

Kudlow seemed stunned. "You've done this before?" he asked. (About 50 times since the crisis began.) But he remained polite in the face of all this suspiciously socialist-sounding rhetoric -- because it came from a Republican. Her old mentor Bob Dole even confirmed it, an American Banker report today reveals...