Comments on: FDL Book Salon Welcomes Sheila Bair, Bull by the Horns: Fighting to Save Main Street From Wall Street and Wall Street From Itself

By: Mauimom

Mauimom — Mon, 19 Nov 2012 05:25:22 +0000

Dear Sheila,

Thank you again for spending two hours with us. It’s much appreciated.

As I read back over the discussion tonight, I was struck by this comment of Professor Galbraith’s [@ #6]

Let’s begin with mortgage modifications. Just last Wednesday in Washington — I’m told by someone who was there — Larry Summers stated that in early 2009 there were no viable plans for systemic loan modifications — nothing that would not have undermined the economic incentives for solvent homeowners to pay their mortgages.[emphasis added]

In your response to this – illustrating Summers’ “error” or downright lying — none of us ever focused on the portion I’ve highlighted.

But doesn’t this illustrate a big part of what was going on then [and what continues today]: these guys were just CRAZY about keeping those “economic incentives” for regular folks to pay their mortgages [whether under water or not]. They were NOT so keen on “economic incentives” for assuring that bankers and hedge funds behaved honestly or paid for their errors.

All this talk about “moral hazard” always focuses on the fear that “little guys” will walk away from their mortgages. And all of the “solutions” seek first to assure that bankers & hedge funds will bear no cost for their stupid and risky behavior. Again and again it appeared to me that you and the agency would come up with a solution, but it would be shot down by Geithner et al. on grounds such as this.

In reading your book I was inspired by what I took to be your overriding belief that the law should apply to EVERYONE, and that government has a role in protecting consumers from those who seek to cheat and evade.

Like so many here, I appreciate your service & thank you for it.

By: emptywheel

emptywheel — Mon, 19 Nov 2012 01:50:07 +0000

Thanks again for such an engaged salon, Sheila, and for your service.

By: dstatton

dstatton — Mon, 19 Nov 2012 00:46:11 +0000

I am a retired FDIC bank examiner (1972-2003), and I keep in touch with some of my former colleagues, one on whom worked closely with you, and they are unanimous in their admiration for your work. I have never been prouder of my former agency. Call me biased, but I always felt that the FDIC was the most effective bank regulator because of its independence and its focus on its primary mission, protecting the deposit insurance fund.

By: DWBartoo

DWBartoo — Mon, 19 Nov 2012 00:35:27 +0000

I’ll second that comment in all particulars!

By: spocko

spocko — Mon, 19 Nov 2012 00:31:00 +0000

Thanks! Please do a blog post later on these or come back an answer these after dinner. The book salon remains open for 24 hours.

And I’d like to thank your husband for his service :-) Having a supportive spouse makes all the difference sometimes.

By: DWBartoo

DWBartoo — Mon, 19 Nov 2012 00:29:48 +0000

Very well said, spocko. The “cost” of “doing business” may always be passed “on” … while personal consequence is actually personal and costly, or should be in “time” … which is “all” that human beings truly have to spend on that level of the “personal”.

Who knows, an appreciation of “time” might lead to an appreciation of life … even beyond one’s own?

Therein lies such hope as humanity must have, in terms of civil society and for the planet’s capacity to support human life …

By: CTuttle

CTuttle — Mon, 19 Nov 2012 00:28:58 +0000

Mahalo Nui Loa, Ms. Bair for writing the book and all your efforts…!

Mahalo to James, Bev, and all, for another outstanding Book Salon…! *g*

By: tuezday

tuezday — Mon, 19 Nov 2012 00:27:41 +0000

I would like to say, my long ago undergrad self, would like to thank you profs for your continuing education. I salute you, now more than ever!!!

By: Sheila Bair

Sheila Bair — Mon, 19 Nov 2012 00:25:17 +0000

No time bomb. Just a missed opportunity. I think prospectively, the paperwork is being handled much better, but there is still a mess to clean up on the legacy loans.

Dear Everyone- This was a lot of fun and you really took me through my paces. I’m going to go get some dinner now and walk two very restless dogs with my also-restless husband. So sorry I couldn’t get to all of these. I will try to do a blog later that addresses issues I haven’t covered.

My Very Best,
Sheila Bair

By: spocko

spocko — Mon, 19 Nov 2012 00:23:17 +0000

I find it helpful to know what motivates people on both the positive side and the negative said.

The Chocolate bar and the stick. (I mean who wants carrots? Donkeys! I like chocolate!)

When you look at the mortgage problems I looked at what the incentives were for people selling bad mortgages and what were the punishments. If you can only see upside and little downside of course you will sell more of the crappy mortgages to people. We often read about civil penalties and hear, “The cost of doing business” well if that is your attitude, then you are never going to change. Make a billion dollars, pay a 100 million fine and no jail time? You are still winning.