WASHINGTON -- Former FDIC Chair Sheila Bair sharply criticized Congress for failing to approve economic stimulus measures, saying elected lawmakers who haven't repaired the economy "need to be held to account." Bair, an influential Republican, said more infrastructure spending by the federal government would provide a critical boost to the job market, and said Congress should approve additional spending, even if it requires borrowing money.
"Infrastructure spending's number one. I think we've squandered cheap financing rates for five years ... We haven't spent the money," Bair said during an interview on HuffPost Live on Wednesday. "Everybody wakes up in the morning, 'What's the Fed gonna do?' I don't like that. I want the pressure back on the elected leaders. They need to be held to account. They need to get the economy going."
WATCH Bair's comments in the video above.
Bair, a former aide to Sen. Robert Dole (R-Kan.), was appointed chair of the FDIC in 2006 by President George W. Bush. She was an outspoken critic of reckless lending in the banking system prior to the 2008 meltdown and has been a persistent voice for financial reform in the years since. Her stance on additional infrastructure spending stands in sharp contrast to the policies pursued by the GOP in Congress, which recently rejected extending federal unemployment benefits to individuals who have been jobless for 6 months or longer, on the grounds that doing so would contribute to the deficit and encourage sloth.
Bair said that any long-term problems with Social Security and Medicare did not justify inaction in addressing near-term troubles.
"Look, on entitlement reform, I think you do need a long-term strategy. I'm not one of those people who say we can ignore that -- we can't. But it can be long-term. And if you get something out of this spending, you get something with long-term benefit -- which you will with infrastructure: You get infrastructure, which we desperately need. We need jobs, better job training ... This is low-hanging fruit."
Bair also took a swipe at the problem of income inequality, arguing that the Federal Reserve is exacerbating the situation with its quantitative easing policy. Under quantitative easing, or QE, the central bank purchases bonds from U.S. banks as a means to pump new money into the financial system. Bair said the broader economy isn't benefitting.
"I do think it's made income inequality a lot worse. It's inflated financial assets. I mean, they say that's the purpose, right, to get this wealth effect? But what is it? The top 10 percent of the population owns 80 percent of the stock," Bair said. "We need fiscal policy. And I know the Fed says, 'Well, Congress isn't going to do anything, so we need to do this.' But I think what they're doing at this point just continues to skew wealth towards the very wealthy. We need Congress, we need fiscal leadership."