A Republican to Save Us

You probably don't know much about Sheila Bair, but she is looking out for you, and that is why the big guys on Wall Street and their allies in the Obama administration are out to get her.

Bair is the Republican whom President Obama reappointed to head the Federal Deposit Insurance Corp., but she is protecting the interest of taxpayers as no Democrat has in this administration, and she needs your support. Huge financial decisions are being made by this government, involving trillions in future obligations of U.S. taxpayers, and Bair has been a rare effective voice for the interests of ordinary folk.

Once an aide to then-Sen. Robert Dole (R-Kan.), Bair was appointed by the first President Bush to the Commodity Futures Trading Commission and reappointed by President Clinton. Later she was named head of the FDIC by President George W. Bush. Throughout her public service she has proved to be a vigilant protector of consumer interests.

Bair angered people on both sides of the political aisle by repeatedly raising questions about the radical deregulation policies that unfettered Wall Street's greed. She has been a great watchdog of the public's interest. That was acknowledged recently when she and former CFTC Chair Brooksley Born, the prescient hero who warned most clearly of the coming debacle, each won a John F. Kennedy Library "Profile in Courage" Award.

Bair has continued to show courage in her work. As The Wall Street Journal noted: "The FDIC's influence has grown in the past year because of Ms. Bair's willingness to challenge her peers, as well as her agency's central role responding to the financial crisis. Ms. Bair warned about the housing crisis before many of her colleagues."

The current point of conflict between Bair and the hacks who got us into this mess -- and who have resurfaced as the key players running the bailout -- is financial industry accountability. She started demanding that accountability last fall when the Bush administration began the TARP bailout and she continues to do so under Obama. Throughout, her nemesis has been Timothy Geithner, former head of the New York Federal Reserve Bank and now secretary of the treasury.

The most glaring example of this conflict has been the battle over the management of Citigroup, the "too big to fail" banking conglomerate that became the largest in the world thanks to changes in the law advocated by Clinton Treasury Secretary Robert Rubin. Rubin then left the government to become chairman of the executive committee at Citigroup, a post he occupied as it made risky bets on derivatives and incurred record losses. Citigroup was saved from oblivion by a plan engineered by Geithner, whom Rubin had successfully pushed for the top job at the New York Fed.

That plan, endorsed by the Bush administration, left the U.S. government pumping $50 billion into Citigroup and guaranteeing an additional $300 billion of its "toxic" holdings. In return, we taxpayers were to receive preferred stock with the promise of significant interest payments, but now the terms have been changed. Thanks to Geithner's intervention, Citigroup will be allowed to convert half of the government's preferred stock into almost worthless common stock.

Enter Bair, who has been insisting, over Geithner's objection, that major changes occur in the leadership of Citigroup to give the taxpayers a better chance to get some of that money back. She has an obligation to make that demand because the FDIC is a part guarantor not only of Citigroup banking deposits but also of the $300 billion toxic assets package.

In her role of protecting the taxpayer interest, she has been pressing for replacing Citigroup CEO Vikram Pandit or at least more fully overseeing his performance. He took over Citigroup in December 2007, and while he now claims to be committed to reforming his bank's operation, as The Wall Street Journal concluded, "For his first year on the job, Mr. Pandit insisted Citigroup's business model was basically sound."

Bair didn't believe that the model was sound, and she has doubts about the ability of Pandit and other top banking executives to change their high-roller ways. As David Weidner put it on MarketWatch, "By threatening the things most precious to bank executives--their pay and jobs--she has sent a clear message to the industry: Your bailout is not without a price. We expect results."

But, he added ominously: "Bair's hardball tactics aren't just irritating bankers, though. She's also making enemies of career bureaucrats and Wall Street sympathizers. Treasury Secretary Timothy Geithner ... reportedly tried to push out Bair before he took office in December."

Rest assured, if Bair loses out and Geithner has his way, Citigroup's CEO and the other Wall Street moguls will be thrilled. But the public will have lost its most effective advocate.

Comments

[timewaster2dcore]

OK, Robert, where was this Sheila Bair during the Bush Administration's "unaccounted-for", squandered TARP spending by Hank Paulson?? Just curious. It amazes me that some Democrats are falling easily for this kinda of article.

[mjc]

Last fall when Hank Paulson was selling his ability to be THE financial officer in charge of the bailouts and the funds that went with the TARP funds I heard Shelia Bair speak and her message was so vastly different than his and the other blind mice it amazed me that SHE wasn't picked to be the next Treasury Secretary. Lots of experience, lots of chutzpah in the face of the corporate interests which apparently had and would rule corporate interests of the US. She wasn't one of their flunkies and that probably scared a lot of them. But why Obama ignored this gem amongst the plastic rocks in the Federal Reserve and US financial agencies I have no idea. He picked the zombies' buddies and they have proved to all of us just exactly for whom they work. Certainly Obama supports her efforts to bring these bad boys under control, including Geithner and Summers.

[kozy]

I believe we have actually two governments: Government No. 1 consisting of lobbyists and the congressmen they control, and the other, Government No. 2, consisting of congressmen that are not under complete control of the lobbyist government. Shiela Bair, to her credit, would belong to Government No. 2. Obama himself is (or WAS) probably Government 2, but many in this administration belong to Government No. 1. Why do bankers get everything they want and more? Lobbyists. Why are there no high speed trains in the U.S. like advanced countries have. Lobbyists. Why is there a continual oil "crisis"? Lobbyists. Why electric cars may actually make it? The electric utility lobby coupled with Government No. 2 will be fighting the oil lobby -- possibly better than an even match -- and possibly winning. The only way to get health care passed? Find two of the strongest lobbyist groups and somehow trun one against the other. Restricting lobbyists in Government No.1 is not a free speech issue as the far right claims. The lobbyists are in effect an unelected government that should be unconstitutional.

[logicalchoice]

"The lobbyists are in effect an unelected government that should be unconstitutional."
That uses money to get our "elected" officials into office.

[DrFitz]

The Geithner pick was the biggest mistake Obama has made, along with Summers as head of the NEC. The axis of banker appeasement is seriously undermining his Admin and putting the country and its recovery at risk. I wish competent and independent women like Bair and Born were the top two economic voices getting Obama's ear.

[wehrke]

Great article and rightly points out that "special Interests" are a concern regardless of party affiliation. Both democrats and republicans have been guilty of ignoring the people in favor of the folks that donate to their campaigns.

[vonPinto]

What is all this?

[wilsonveteran]

This article does show who got us into this mess and I am surprised to find it here. It is a liberal myth that conservatives don't care about the people it is actually the other way around. Conservatives believe in America and the American people and that they are the answer to our problems not government. If liberals believed in the people they would not be doing what they are currently doing and making all the decisions for them with big government and spending all their money.
I do not believe the current Administration knows how to stop this recession. It is obvious that the stimulus is not working and they do not know where to go from there. We definately need a good conservative mind overlooking all of this.

[KrystynM]

seriously? Stop it.

[adoantarel]

I think you err on the opposite side. What this article shows us is that there are good and bad on both sides. I applaud Ms. Bair for her work and her principles.

I am a liberal democrat and my parents are republicans. We debate and have different viewpoints at times, but we are all good people. We need not be enemies.

[KarelS]

Uhhh. So the years from 2001 to 2006 were a love fest between BushCo and the American people with his minions dedicating every working day to looking out for the best interests of the little guy?

"Conservatives believe in America and the American people and that they are the answer to our problems not government."

Are you sure you aren't Rip Van Winkle? It must be really hard to spend six+ years asleep and then come up with the deductions you raise.

[AnotherMcIntosh]

Why would a Republican be a "rare effective voice for the interests of ordinary folk"?

Merely saying that doesn't make it so.

This is like saying that Bush-43 was in favor of "compassionate conservatism."

Experience has shown that being a "voice for the interests of ordinary folk" is inherently contrary to the nature of Republicans. They hate the ordinary folk. That's why they are Republicans.

[Buddy McCue]

I don't know much about Sheila Bair, but why would Mr. Scheer try to be deceptive in writing about her?

I'm a longtime regular listener to KCRW's "Left, Right and Center" where Robert Scheer speaks for the left. Give it a listen sometime (it's available as a podcast online,) and you'll find that he is not a rightwing "plant."

[AnotherMcIntosh]

There is nothing to indicate that Mr. Scheer is trying to be deceptive with respect to writing about Shelia Blair. Nothing at all. Nor is there any reason for anyone to believe that he is a "rightwing 'plant'."

People sometimes attribute qualities that they have to others, and sometimes do so when it is not justified.

There is no question in my mind that Robert Scheer is on the correct side of many issues, and that he is an "effective voice for the interests of ordinary folk." With all due respect, I believe that he is projecting that good quality onto Sheila Blair.

[DiogenesOfAlaska]

I don't know much about Mr. Scheer, but I suspect that the JFK profile in courage award isn't given to people with motives that are evidently questionable. -:)

The use of 'experience' and 'inherently contrary to nature' in one argument often leads to fallacy.

[VirginiaJeff]

Great article. As a Democrat, I think it's especially cool that you pointed out the good work of a Republican.

[paixa3]

Ditto...thank you Mr. Sheer. Unfortunately, overall, the USA has a rather criminal government. Your president has intentionally missed the mark on economics and justice and I think that is a shame.

GET BUSINESS OUT OF CONGRESS AND GOVERNMENT.

[sptatt]

Maybe when the Larry and Timmy corporate puppet show finally tanks, George W. Obama in a desperate effort to save his presidency will appoint Ms. Blair. Hope it isn't too late.

[TheFriendlyAtheist]

Shouldn't take too long for that to happen; I say by late Sept.

[NormDePleum]

Thanks for the insight on this stalwart person. That she is a Republican should be of no importance.