By ANNA PALMER and MJ LEE
Sheila Bair isn’t going anywhere.
If anything, the former head of the Federal Deposit Insurance Corp has increased her profile since exiting the agency last year promoting her tell-all book — “Bull by the Horns” — on her time as a key figure in the financial crisis.
“I have a right to set the record straight and make my own contribution to the historical record about what happened,” Bair said, arguing that much of the information on the near collapse of the financial system has been inaccurate. “This was an extraordinary time, and people have a right to know of the policy disagreements given the enormous amounts of government money that were put at risk.”
Most bank regulators quietly leave the stage with many going on to work for law firms that specialize in banking issues or to regulatory consulting firms.
Bair is testing out a new model: Regulator turned watchdog.
She has started a nonprofit group — the Systemic Risk Council — to push for tougher regulation of Wall Street, making it clear she is doing so because she thinks current officials aren’t doing enough.
And her book provides a harsh assessment of how the government and her colleagues handled the financial crisis and the efforts to put in place reforms in its aftermath.
The question is whether her take-no-prisoners approach will make her an effective advocate now that she is on the outside looking in or simply someone who is good for a sound bite but whose real influence is minimal.
Bair’s former colleagues are hardly surprised by her vocal approach.
“Sheila calls it like she sees it. I think she speaks what she believes to be the truth,” said Richard Osterman, who worked alongside Bair as a top lawyer at the FDIC. “She’s been a very effective regulator. She’s been there; she’s seen the crisis; she’s dealt with the issues first hand. … I think she provides a very helpful and unique perspective.”
Dennis Kelleher, a critic of Wall Street and president of the nonprofit group Better Markets, agreed that Bair is positioned to be an effective voice in public debate, but cautioned that a past regulatory role comes with some baggage.
“One of the things that makes their insights valuable is because of their prior experience. However, one of the limitations of their insights is some battle scars from having been on the inside,” Kelleher said. “I think that she is in some ways uniquely positioned to be able to provide an angle of vision on regulators — on the other hand, it’s not the only angle of vision and it may not even be the best angle of vision at all times.”
Bair says that her motivation is to keep regulators and Wall Street honest and that she isn’t prepping for a return to public service.
That doesn’t mean she’s keeping out of electoral politics — Bair has endorsed Elizabeth Warren’s bid for a Massachusetts Senate seat. Bair and Warren worked closely together in the financial crisis, often ending up on the same side arguing for more government programs to assist homeowners. Her second act isn’t winning her any friends among the financial services sector she long battled. In interviews with nearly a dozen banking and financial services industry insiders, Bair remains a flashpoint. In particular, the Republican, who later became a champion of the left for taking on Wall Street, has caught their ire for refusing to go quietly into the private sector.
One banking lobbyist described her as the “Dick Vitale” of the financial sector, armchair-quarterbacking after the close of her five-year stint at the government agency.
Bair sat atop the FDIC between June 2006 and July 2011 with a background in government and the private sector, previously working on the staff of ex-Sen. Bob Dole (R-Kan.), as a commissioner and acting chair of the Commodity Futures Trading Commission, as a Treasury official under President George W. Bush and also as senior vice president for government relations of the New York Stock Exchange.
While Bair sees her new role as that of keeping government honest, others feel her aggressive approach and, in particular, harsh words in her book about Treasury Secretary Timothy Geithner are unhelpful for moving forward with financial reform.
Bair directly takes the former president of the Federal Reserve Bank of New York, whom she dubs “bailouter in chief” in the book, to task for helping out the country’s top banks while requiring little accountability and at the same time doing little to help those at risk of foreclosure on their home loans.
Bair was also critical of the Office of the Comptroller of the Currency and in her book says the agency should be abolished.
“Let’s face it, the OCC has failed miserably in its mandate of ensuring the safety and soundness of the national banks it regulates,” she writes.
On Friday, John Dugan, who headed OCC during much of Bair’s tenure, told POLITICO that he has not read Bair’s book, and declined to comment on the ex-FDIC chairman’s role as Wall Street watchdog.
“I don’t really have any comment on that,” he said following a speech at George Washington University.
More recently her defense of Citigroup’s board for deciding to part ways with CEO Vikram Pandit has been viewed as piling on by the financial services executives. Bair had been highly critical of Pandit both while at the FDIC and since leaving the agency.
“People understand the need for diplomacy. To come out and attack somebody is bad form,” said one financial services executive, who like others requested not to be named in order to candidly discuss a former regulator. “She marginalizes herself. She’s just on a rant.”
Another senior financial services executive said that her recounting of intimate details of regulator and private sector conversations have created a “very significant erosion of trust.”
Bair defends her book, saying that she didn’t try to embarrass anybody or make public specific emails.
“I did take people to task, but only for the policy positions that they were advocating. … I don’t think anybody will be surprised,” Bair said. “They may be unhappy about it. I think people should be willing to defend the policy positions they took.”
Bair met with Geithner on Sept. 18 shortly before her book came out to discuss Wall Street reform, according to a release form the department last month.
The griping from Wall Street officials about Bair only helps her image among her supporters.
Cam Fine, head of the Independent Community Bankers Association, said that her latest attacks are “vintage Sheila Bair.”
“I don’t think she’s changed a bit, other than being able to speak more candidly than she could when she was FDIC chairman,” Fine said. Fine, who worked closely with her during the financial collapse, said that for Bair, “It’s not just good public policy in her eyes to do something about ‘Too Big to Fail’ and financial concentration, it’s a personal imperative.”
But Bair isn’t acting as a one-woman backstop to industry titans. In June she formed the Systemic Risk Council in partnership with the Pew Charitable Trusts and the CFA Institute that is focused on promoting regulatory reform.
“We’re not going to get [reform] done unless the population becomes more engaged, educated on the issues and can weigh in. The lobbying pressure is just tremendous,” Bair said.
And despite the continued tense relationship with the biggest banks, Bair said she still has hope that they can take the long view on stronger regulations.
“The industry can do what they want, and you can only hope that they will try to step back and try to take a broader view of what happened in 2008 … and work more constructively with regulators.”