FDIC Head Says Parts Of Regulatory Plan Won't Fly

WASHINGTON — Federal Deposit Insurance Corp. Chairman Sheila Bair is pushing back against key elements of the Obama administration's financial overhaul plan, saying they wouldn't survive in Congress and calling her own alternatives more viable.

In an interview with The Associated Press, Bair said Congress won't approve two major parts of the package: Expanding the Federal Reserve's authority to regulate the largest financial companies and giving a proposed new consumer protection agency examination and enforcement powers over banks.

Such authority now belongs to her agency and other bank regulators.

"There's a lot of resistance from a lot of different quarters to a lot of the things the administration has submitted," Bair told the AP Thursday. "That is a reality the administration needs to deal with."

Bair said alternatives she has backed would "provide a framework that can actually get through Congress." Her ideas include empowering a new agency to protect consumers from abusive mortgage and credit card products – but having bank supervisors enforce those rules.

Her statements highlight Treasury's uphill struggle to sell the administration's proposed financial overhaul to Congress and the public. Since the plan was rolled out in June, industry groups have balked at rules they say will burden companies and raise borrowers' costs. Bank industry lobbyists are leading the charge against major parts of the plan.

Congress has objected to concentrating more power in the Fed. Critics note that the central bank failed to properly use its consumer protection authority before the crisis erupted.

Bair and other federal regulators have voiced their own opposition to parts of the plan, in what some Obama officials have dismissed as efforts to protect their turf.

Bair says she's raising legitimate policy questions. As head of an independent regulatory agency, she said she has a duty to tell Congress her opinion.

Amid concerns the plan is faltering, top Treasury officials have defended it in a series of interviews this week. They have insisted the plan is on track and have played down differences among regulators.

"What's important is, at the end of the day, that we all keep our eyes on the prize, make sure we're all pointed toward comprehensive reform of the financial services sector," Deputy Treasury Secretary Neal Wolin told the AP in a separate interview.

He said it's not surprising "that in understandable Washington style, (regulators) defend their own institutions."

Bair's view that the administration plan can't pass Congress could become "a self-fulfilling prophecy," Wolin said.

Comments

[joebhed]

10:13 PM on 08/17/2009

still pending?

[hopefull252]

04:53 PM on 08/17/2009

If you are looking for a way to help the people of the world, and shine the light on the people who are really at the center of our economic problems and is most taboo topic in history is to talk about the Central Banks.

The FED, IMF and the World Bank are behind the debt of the world. Their history will scare the hell out of anyone who researches it. The people behind the Central Bank are secretive and stay out of the limelight so no one can target them, but their tentacles reach into all the governments of the world and the so called most dangerous countries of the world are the ones with out a Central Bank. “Think about it”

The Central Banks have lent monies to just about every government to be secured by the taxation of their people. The third world countries are in debt 2 or 3 hundred percent of GDP. They are forcing Governments to take on this debt by manipulating commodities, markets and currencies. If you don’t play coups or wars can change your mind. The United States have had several president assassinated trying to buck the FED.

What is the most interesting thing is they never had the capital to make the loans. It’s more like Bernie Madoff, but no one can audit a Central Bank.

If you’re looking for real change expose the Central Bank.

[mrcontinental]

12:10 PM on 08/17/2009

The FED needs to go and should not be regulating anything, anywhere. And Obama should be ashamed for even recommending such nonsense.

[eladora]

11:55 AM on 08/17/2009

Bank of America is running the fed and the fdic. Make no other assumption than that and you will have your answer. This was the deal all along--they take Merrill and the govt would do the rest of the acquisitions for them by closing banks and handing them 25 billion in portfolios to service without spending a dime. People that work at boa have stated they have been working on the setup for payment receivables on the colonial bank failure for 60 days. Whats that tell everyone ?

[research]

10:57 AM on 08/17/2009

Put the FED UNDER THE FEDERAL GOVERNMENT, not the other way around!

God help us.

The FED is the Banksters power center.

Democracy NOT Plutocracy!

Kucinich/Dean 2012!

[fifty8]

10:32 AM on 08/17/2009

8/27/08

THE MYTHICAL FDIC FUND
By William M. Isaac

William Isaac, former Chairman of the Federal Deposit Insurance Corporation, (FDIC)

…When I became Chairman of the FDIC in 1981, the FDIC's financial statement showed a balance at the U.S. Treasury of some $11 billion. I decided it would be a real treat to see all of that money, so I placed a call to Treasury Secretary Don Regan:

http://www.marketoracle.co.uk/Article12792.html

[BobBeresford]

08:31 AM on 08/17/2009

Good work Sheila !...and for heaven's sake, oppose every bit of the Geithner / Wolin proposal. It is a very dangerous attempt to allow the foreign fronts ( BIS, IMF, World Bank ) for the International Merchant banks ( like Goldman, JPM, Citi etc ) to control the US Financial system with full access to all detail.'

The IMF has said it wants to act as a World central bank, using its 'fictitious' SDR's - Special Drawing Rights - and a new world currency. It wants to monitor all national financial computer systems, via the national Reserve banks. Probably after placing those countries in debt and running an austerity program........what the IMF usually does. ( It has ruined New Zealand. )
Note that Timothy Geithner is a policy planner for IMF and Henry Paulson is on the board.

They are trying to crash out America - they created this whole crisis to subjugate America, making it a spent colonial force.....not a big part of the new world plan, which is a multipolar financial system and a world government. Proposed capital - Jerusalem.

So don't let the big private world banking system that created this mess, then take absolute control - via your private Fed ( a cartel of Merchant banks ). And then dissolve your country - after sending it into civil war. Of course there were bad practices - but why let those same people ""rectify"" the situation. You can work it out yourselves.
Don't leave weasels in charge

[Kassandra]

08:47 PM on 08/16/2009

Bair is good; that's why it took so long to confirm her in Obama's "post partisan dream world"
To dismiss "the little lady" as just jousting in interagency turf battles is too cute by half.

This is one of the WORST proposals Obama's admin has come up with so far...to put the independent Federal Reserve in charge of the chicken coop would be tantamount to putting Enron in charge of energy policy.
Whatever possessed him to back such a thing? Talk about turning US over to the banks and not being able to even do what we can do to oversee them now. They would operate under a total cloak of darkness.
Every day I think more and more Alex Jones was right.

[LeeCalif]

07:03 PM on 08/16/2009

Make it work !!

Re-regulate even more !!!

[joebhed]

06:40 PM on 08/16/2009

We should sit tight and have the Pecora Commission again look at WHAT CAUSED the financial crisis, with recommendations for reform that result from that investigation.

A proper investigation of the crisis might call for serious reform of the monetary system, and then we wouldn't need all this phony and failed regulation and quasi-regulation.

Reading "The Chicago Plan and New Deal Banking Refoms" by Dr, Ronnie Phillips shows that the FDIC and Glass-Steagall were bones thrown in to protect bank depositors when the Congress failed to pass the Chicago Plan legislative proposal.
Had they passed the CP, we would not need the FDIC because we would have removed the risk to depositors that goes with the bank's ability to CREATE all the money.
Banks of all kinds should not have any power to create money.
Creating money should be a government function.
Conversely, government should get out of the way of banking, which it could readily do if all loans are made with real money.
With full-reserve banking, a component of the Chicago Plan proposal, the FDIC could go the way of the horse-drawn carriage. With the Chicago Plan we could abolish BOTH the Fed and the FDIC.

Placing the private bankers of the federal reserve as the super regulator of all the nation's banks and financial services corporations is clearly a fool's errand.

The rest of this sounds like typical Obama posturing, hands flying: "Look! Look! We're doing something!".

[SangZe]

07:33 AM on 08/15/2009

Change, indeed. Obama knows his plan would never get through.

[sonofsamphm1c]

10:19 PM on 08/14/2009

Bear - hand picked by Bob Dole. First appointed by Pappa Bush. Appointed to the FDIC by W.

She will occasionally run against Republican politics, but this lady is a Red State Republican.

[DemocraticVoter]

07:38 PM on 08/14/2009

So wait a minute -- the head of the FDIC wants American Citizens to trust the FDIC and Bank Supervisors to enforce regulations -- I assume this is because they have such a strong track record of successfully constraining the fraudulent and unethical practices in which banks have engaged for the past two decades. Outstanding idea -- perhaps we can put Madoff in charge of this new agency and allow former Enron executives to do the audits.

[Kassandra]

08:38 PM on 08/16/2009

You misread the article, Go back and try again

[DiogenesOfAlaska]

06:30 PM on 08/14/2009

At this point, there's only lesson to be drawn from this opposition to the treasury White Paper:

whatever happens de facto or has happened de facto in the past has zero implication about what should be the case.

One more time, for the philosophically inclined:

an 'is' does not imply an 'ought' and just because something is the way it is doesn't mean it's good the way it is.

In still other words: there's always room for incremental improvement and the fact that such improvements didn't take place already or don't take place now doesn't imply that they shouldn't take place.

You think all of this is balderdash?

Then ponder this: how do you restore legitimacy when it's plain for everyone to see that obstructionism and powerplay determines the outcomes? This may be a fun way to approach things when you have a nation left to throw in the trashcan. But what if things are getting real important? What if you can't afford another unraveling?

[sabrina105]

04:21 PM on 08/14/2009

So I guess our job is to convince congress to propose and pass something the financial industry wouldn't dream of proposing, like real regulation, oversight, and the means to insure full accountability for this susceptible industry?

Like there's any chance of that with our current batch of legislators. Bair is simply a mouthpiece for the well-dressed thieves running our financial system and the paid lackeys that they trot out for us to elect or re-elect to congress regularly. Our country suffered an economic coup after Reagan was elected. We may never be able to recover it from the suits with no conscience.