July 5, 2011

Sheila Bair: Unexpected Bank Watchdog—Top Women Extended Profile

Her five years of FDIC chairmanship have seen some of the best and worst of times.

Sheila Bair, who left the FDIC on July 8, has seen the agency through good times and bad during her five years of service at the helm of the agency, with some of the most far-reaching changes in regulation coming to fruition on her watch. (On July 20, the FDIC announced that Bair would be joining the Pew Charitable Trust as a senior advisor on Sept. 7.)

Bair was appointed to the chair of the FDIC midway through 2006, as the boom times were still booming. The Kansas Republican was more in tune with strict-constructionist regulation than might have been expected from someone with her background. After all, her political career had flourished in association with Sen. Bob Dole, R-Kan.; she had been a top Republican staffer in the Senate and also acted as legal counsel to the New York Stock Exchange.

shelia bairBut in 1991 Dole helped her gain an appointment to the Commodity Futures Trading Commission (CFTC), where in 1993 she cast the sole dissenting vote against looser regulation of energy ETFs before Enron became a household word for fraud.

After President George W. Bush named her assistant treasury secretary for financial institutions in 2001, Baird found herself once more in the hot seat, anticipating yet another financial disaster.

This time it was subprime mortgages, and Bair saw the potential for trouble. While she succeeded in pushing through industry best practices regarding subprimes and predatory lending, the measures had no teeth; there was no means of enforcing them.

And tougher times were ahead. Bush appointed Baird to run the FDIC in 2006. Once again she looked into subprime mortgages, and finally went public with a warning about them. She made few friends with her actions, and Treasury officials dismissed her proposed solutions as unlikely to do much.

When the boom went bust in 2008, Bair had plenty of failing banks to focus on, and she steered the agency through those turbulent waters without borrowing from taxpayers to do so. All told, in the years 2008-2011, she presided over the takeover and disposition of 369 banks; in the five years prior to 2008, only 11 banks had failed.

She also pushed for an end to “too big to fail,” but her ideas on how to prevent problems again won her no friends. Internationally, she also urged the Basel Committee on Bank Supervision for stricter capital and leverage standards.

In addition to being involved with IMSA, the American Bar Association and similar groups, Baird is also a member of the Society of Children's Book Writers and Illustrators--as an author of children's books focused on money management.

See the announcement of the AdvisorOne 50 Top Women in Wealth, and see the full list of  this year’s honorees.

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