• Tips gratefully accepted here. Thanks!:

  • Recent Comments

    Beata on My Minority Opinion on Simone…
    Ivory Bill Woodpecke… on Washed up and ranting about th…
    Colleen on Washed up and ranting about th…
    William on The Congressional Hearings on…
    jmac on Washed up and ranting about th…
    riverdaughter on The Congressional Hearings on…
    Ivory Bill Woodpecke… on Washed up and ranting about th…
    William on Washed up and ranting about th…
    William on The Congressional Hearings on…
    William on The Congressional Hearings on…
    lililam on The Congressional Hearings on…
    William on The Congressional Hearings on…
    riverdaughter on The Congressional Hearings on…
    Ivory Bill Woodpecke… on New vaccine in town.
    Propertius on New vaccine in town.
  • Categories


  • Tags

    abortion Add new tag Afghanistan Al Franken Anglachel Atrios bankers Barack Obama Bernie Sanders big pharma Bill Clinton cocktails Conflucians Say Dailykos Democratic Party Democrats Digby DNC Donald Trump Donna Brazile Economy Elizabeth Warren feminism Florida Fox News General Glenn Beck Glenn Greenwald Goldman Sachs health care Health Care Reform Hillary Clinton Howard Dean John Edwards John McCain Jon Corzine Karl Rove Matt Taibbi Media medicare Michelle Obama Michigan misogyny Mitt Romney Morning Edition Morning News Links Nancy Pelosi New Jersey news NO WE WON'T Obama Obamacare OccupyWallStreet occupy wall street Open thread Paul Krugman Politics Presidential Election 2008 PUMA racism Republicans research Sarah Palin sexism Single Payer snark Social Security Supreme Court Terry Gross Texas Tim Geithner unemployment Wall Street WikiLeaks women
  • Archives

  • History

    July 2021
    S M T W T F S
     123
    45678910
    11121314151617
    18192021222324
    25262728293031
  • RSS Paul Krugman: Conscience of a Liberal

  • The Confluence

    The Confluence

  • RSS Suburban Guerrilla

  • RSS Ian Welsh

    • A Great Idea About Capitalism That Was Wrong
      So, back in the 80s, when I was young, green and wet behind the years, one of the great thinkers about how to help poor people was a guy named Hernando DeSoto. (Great name, aces on parents!) DeSoto, who was mostly concerned with Latin and South America had one big idea: the reason that poor people were fucked is they didn’t have clear ownership of what they […]
  • Top Posts

Bair Under Fire

Sheila Bair, head of the FDIC

Sheila Bair, head of the FDIC

You know, I never thought I would be saying this but I think that Republicans might actually be more respectful of women than Democrats.  I’m probably going to burn in Hell now, if I believed in it.  Maybe it’s just a matter of perception and perspective but I just can’t wrap my brain around how Hillary, Sarah and now Sheila Bair have been treated by the Democrats.  Oh, and let’s not forget Diane Feinstein who wasn’t given a courtesy call about Leon Panetta’s proposed appointment to the CIA.  I don’t care if you love or despise DiFi, she was deliberately cut out of the loop and the call went to a more junior member of the Senate Intelligence Committee, Ron Wyden.  No matter how you slice it, it just looks bad.

As Clay Risen writes today in The New Republic in Bair Market, Sheila Bair is one of those remarkable Republicans we don’t find too often- a long term thinker.

Bair is one of a dwindling species in Washington: a pragmatic conservative who recognizes that fiscal discipline and small government aren’t always the answer–and who sometimes sounds downright populist as a result. “A lot of people out there are losing their houses,” she told me last month. “I think people draw false choices between bailing out financial institutions and helping homeowners. Well, maybe we need to spend on both.” Indeed, Bair’s views on the current crisis may actually be more liberal than those of Obama’s generally centrist appointees, and already there have been signs of strain between Bair and the incoming administration. Who could have guessed that the high-ranking government official most likely to attack Obama’s economic policies from the left would be–of all things–a Republican?

The rest, of course, is history. Few listened to Bair, and, when the housing bubble burst in late 2007, foreclosures began to pile up. In December 2007, Bair told Congress that some 1.3 million mortgage loans would reset over the next year, which “could result in hundreds of thousands of additional mortgage foreclosures over the next two years.” A few months later, she was pushing a comprehensive mortgage relief program, hardly the bailiwick of past FDIC chairs. Her plan, which drew praise from Capitol Hill liberals and consumer advocates but the ire of Henry Paulson and the White House, would require banks to renegotiate interest rates for troubled mortgages, with the government promising to cover most of the losses if they went into foreclosure later.

Opponents accused her of wanting to bailout negligent homeowners–and thereby violate conservative economic values. But Bair argued repeatedly, with impeccable data, that many of the homeowners had been duped, and that in any case the potential social cost of millions of unoccupied houses outweighed the risk. For Bair, this wasn’t a sign that she’d given up her Republican credentials. Rather, it was a pragmatic solution to an unprecedented problem–a problem that Bush has yet to tackle, a year later. Without action now, “the housing market will continue to deteriorate,” she tells me, adding, “I don’t understand why we can give out billions to the financial sector, but when we talk about the [individual borrower] level, we get out the fine-toothed comb.”

She seems to be able to put country and principles before party {{gasp!}}. No wonder the Obama economic team despises her.  She’s so not like them. Bair has used her clout at the FDIC to rescue some shaky banks while at the same time, and in some respects, succeeding,  holding some of those bankers accountable for their actions.  Elizabeth Warren, the Harvard prof who specializes in consumer credit and debt and who is now chairing a Congressional Oversight Committee of the Paulsen Bailout Bill, can’t say enough good things about Bair.  She’s smart, assertive, not afraid to challenge her superiors AND she is absolutely loathed by both the outgoing and *incoming* Treasury Secretaries:

By December, an anti-Bair whisper campaign was making the rounds. The Wall Street Journal reported that Geithner had criticized Bair for protecting the FDIC over the broader interests of the economic recovery efforts, while a December 4 Bloomberg account had anonymous sources saying that Geithner didn’t think Bair was a “team player” and that Obama had decided to isolate her, if not ask her to step down as FDIC chair. “They’re just criticizing me for doing my job,” Bair tells me defensively.

Ahhh, yes, the “You’re not a team player, you’re hard to work with” defense.  It is the stock phrase used ’round the world when a woman gets in the way.  There’s nothing worse for a woman in business than to be told she isn’t cooperative.  It’s a code phrase for “bitch” but saying that would contribute to a hostile work environment.  But in this case, it is reminiscent of being called a racist during the primary when any comparison of Obama to his opponents made him look bad.  It doesn’t take much to be called a troublemaker at work.  You just have to be warm, breathing and expressing your best judgment.  Happens all of the time.  Sheila’s not going with the $600,000,000 campaign flow, therefore we will isolate her and not invite her to meetings until she gives up and resigns.  I know!  Let’s say she’s not a team player.

Tim Geithner has decided to cut Bair out of the loop during the transition period and has only brought her in for  perfunctory meetings.  This is a bad sign of things to come and unacceptable in an economic crisis of this magnitude, especially when the person left out is a responsible, competent key player.  Geithner and Summers strike me as the cocky elite types who are so full of themselves that they don’t need to listen to anyone else.  While the country is teetering on the brink of a Depression, we really don’t need that s%^t.  But not to worry, so far, Bair says she’s staying put, which she has the right to do because she still has 2.5 years left in her term.  However, there is something deeply unsavory going on in the treatment of Bair and I don’t think it is limited to the alpha males refusing to get along with her:

Bair, while paying lip service to presidential prerogative–“I assume if they want change, they’ll let me know,” she says–has no incentive to leave and every reason to stay, particularly if she believes that Geithner will continue Paulson’s Wall Street-friendly bailout strategy. And she’ll have her hands full: The number of banks at risk of collapse is growing–171 by the end of September, the latest number and the highest in 13 years–while the foreclosure crisis, once limited to homeowners who had borrowed more than they could pay, is now spreading to homeowners hit by unemployment. By some estimates, at least one million homes will enter foreclosure next year, on top of some 880,000 this year, leaving in their wake gutted neighborhoods, fragile families, and battered local economies. Meanwhile, so far, Obama seems to be putting off homeowner assistance in favor of infrastructure stimulus and industry-specific bailouts.

Like some of Bair’s critics in the Bush administration, the Obama team is right to be wary of the FDIC chair’s sharp elbows. Not only will she continue the very public push for her foreclosure-assistance plan, but–as she did during Bush’s rescue of Citigroup–she is likely to demand that the FDIC once again be awarded a large chunk of assets when its money is used in future bailouts. “She has no interest in going along to get along,” says Tom O’Brien, former dean at the UMass business school and a close friend of Bair.

But it’s not just a question of which direction, tent-wise, Bair should be spitting. When it comes to the nuts and bolts of bank rescues and mortgage relief, no one in Washington knows more than Bair. And while she readily admits that her plan isn’t a panacea–“there are no silver bullets, no perfect solutions,” she says–her agency has been doing loan modifications for decades, using them to clean up the assets of shuttered banks it takes over. “She absolutely knows how the various institutions work, what kind of strategies and proposals have not worked, and what are the immediate steps that need to occur,” says Taylor. “She can hit the ground running. If she had support from a White House that cared about these things, we would have a rapid improvement.”

It’s becoming more and more clear why Obama was in such a hurry to pass the Paulsen Bailout Bill that didn’t provide for enough oversight. Plus ςa change…

Monday: Bi-Partisan Bank Robbery?

I don’t pretend to understand Credit Derivative Swaps and financial ‘instruments’ and it looks like the people who have been playing with them for the past eight years don’t understand them either.  But we better all get some ejucashun and nollij about them toot sweet because Treasury Secretary Paulson is about to give clean out the treasury to bail Bush’s buddies out of trouble.  Well, we can hardly blame them. Opportunities like these don’t come around often and time is running out.

We should have seen this coming.  The Bushies have been looting ever since they took office.  If they’re not saddling us with tremendous debt from some unnecessary war and loading up planes full of money to Iraq, they are rewarding their lobbyist friends with sweetheart deals.  They’ve really exceeded their daily chutzpah with the last one.  If you have been following Anglachel’s Journal for the past couple of days the plan is clear and the fix is in.  It sounds like Paulson is planning to hand over $700 billion dollars of your hard earned tax dollars to the firms on Wall Street to buy their assets.  The claim is that this will prevent a massive financial meltdown and Depression.  Under that scenario, we the people should expect something in return, like, I dunno, greater oversight?  Accountability?  Regulation?  Nope.  Paulson is saying we should just give these people the money and trust them.  AND instead of asking some of them to take what is “fair market value” for their depreciated real estate assets, which would mean they are perhaps 35-40% underwater, Paulson has decided to give them greater than market value for these turkeys.

But wait!  There’s more.  If you been paying attention, Hillary Clinton has been proposing something like the Home Owners Loan Corporation (HOLC) where the government would restructure and refinance bad mortgages from individual homeowners and make them affordable.  The theory goes that if those homeowners are able to pay their loans at more reasonable rates, the money would start flowing back to the banks, increasing their solvency.   And not only is this a beautiful theory, it has actually been done before- successfully.  It was implemented during the Great Depression.

Of course, that would mean that the banks would take a loss on some of their investment ‘instruments’(God, I hate jargon.  Why not just call it a con game and get on with it?).  And the financial institutions would prefer that YOU the taxpayer is stuck holding the bag, not them the royal f%($-ups.  It *seems* like this was their plan all along.  Play with other people’s money, suck up all the extra liquidity there is in the economy, deregulate everything and when it looks like the whols she-bang is about to go under, scream that the sky is falling so citizens panic about their money and the Treasury cuts yet another sweet heart deal that leaves the rich guys off the hook.

We can’t let it happen this time, guys.  If the economy is really on the verge of collapse, then the financial institutions have to make sacrifices just like everyone else in order to fix it.  Otherwise, the FDIC will be wiped out and everyone’s money is at risk.  Not that Mr. Moneybucks cares.  He’s got his.  You get yours whatever way you can.  If you don’t have friends in high places, tough noogies.  Well, we DO have some friends in high places.  Hillary has a plan, but doesn’t she always?  The question is, will the rest of Congress get religion and where do Obama and McCain stand on the issue?  We need to hold their feet to the fire.  On that note, Sarah at Corrente has some suggestions:

First, and foremost, write and call and email — not just one, but all three — your representatives. Local, state, and federal. Send copies of your letters to the media. Demand Bu$hco’s bailout plan be scuttled NOW.
Second, get out of debt. If you’re contemplating buying something on credit, hold off 30 days.
Third, make sure any checking or savings accounts you have are within the limits of and with institutions covered by the FDIC. If you’re one of the lucky few who’ll have to move some money to do this, get after it.

And in the latest twist, Goldman Sachs and Morgan Stanley have transformed themselves from investment banks to bank holding companies subject to greater regulation.  That initially sounds good but there’s a catch:

In exchange for subjecting themselves to more regulation, the companies will have access to the full array of the Federal Reserve’s lending facilities. It should help them avoid the fate of Lehman Brothers, which filed for bankruptcy last week, and Bear Stearns and Merrill Lynch — both of which agreed to be acquired by big bank holding companies.

So, it looks like Goldman Sachs and Morgan Stanley remain intact, just in time, and avoid acquisition by other banks because they are able to rely on the Federal Reserve to rescue them before they are declared insolvent.  Sweeeet!  Must be nice to have a sugar daddy in government.  Oh, you don’t have one?  That’s because you are supposed to be self-reliant!  Responsible!  A rugged individualist!  It builds character when you have to pull yourself up by your bootstraps.  What?  You haven’t got any boots?  Well, whose fault is that?  This isn’t socialism, ya’ know.