Those of you in support of Bair getting more power, please explain to me what she accomplished to deserve that. She made some of the worst decisions ever, ones that led to instability and loss of confidence in the entire financial system.
It was inconceivable our FDIC chairwoman could underestimate the importance of a healthy bond market to our economy, especially in the middle of a financial crisis. How did she expect not just banks, but companies in every industry, to raise capital without that market? Who would invest in bonds when FDIC could declare debt to creditors void at will?
Worse, she further eroded the confidence in our financial system by allowing two giant institutions, Wamu and Wachovia, to fall one right after another. These failures cast even more doubts in the minds of “main street” consumers on the stability of their banks. These failures also sent “wall street” investors into panic because Wachovia’s inevitable collapse was a direct result of FDIC’s decision to wipe out Wamu bondholders.
These two systemic risks, death of a strong bond market and a big drop in credit flow and lending, led to increasing business failures and unemployment. People didn’t lose just their jobs, they also lost health and retirement benefits. Worse, they risked losing their homes to foreclosure because they could no longer afford mortgage payments.
You wouldn't see how FDIC had been terminating leases without compensation in New York and California, or how Bair's loan modification program at IndyMac (now OneWest) was sabotaged by the agency's own loss sharing agreement in her typical seize-and-dump management of receivership:
"IndyMac's Mortgage Struggle... anger over former IndyMac's loan modification efforts"
"FDIC stepped in... according to their Loss Share agreement... OneWest put $101,760 in their pocket... thanks to the FDIC... And we wonder why nobody could get a loan modification... when OneWest... can foreclose and make over $100k?"
Similarly, when you read
"That's the role the FDIC played for Goldman Sachs and other firms, which took advantage of $940 billion in FDIC guarantees to raise cheap money for themselves and another $684 billion of backing for their trading accounts as an additional perk"
You weren’t told that programs such as TLPG and PPIP, in which FDIC participated, were none other than “open bank assistance.” Bair used the bond guarantee program to help a few elite firms like Goldman Sachs and Citigroup raise capital in the very same bond market she helped destroy. Even more unscrupulous was the fact that this FDIC assistance did not come with TARP-like restrictions in executive compensation. We knew about $11 billion went to Goldman’s bonus pool this year, but we never found out how much actually went to loan servicing for average taxpayers. Bair also agreed to finance PPIP, Tim Geithner’s legacy asset program. This was the very same individual who had to take her above-the-market price-tagged house off the market. Obviously she knew nobody would overpay for her home, so why was she offering loans to help private investors buy toxic assets at bloated value and prop up the corrupt banks’ balance sheets?