Potential Paulson Successors #2: Sheila “Care” Bair

Yesterday we had a look at floppy-mouthed Clintonian Larry Summers as a potential new Treasury Secretary for the next administration; today it’s the turn of Sheila C. Bair.

Voted second most powerful woman in the world after Angela Merkel by Forbes, she is the head of the Federal Deposit Insurance Corporation (FDIC), the government institution that insures all bank accounts up to $250,000. The FDIC has unsurprisingly had a few late nights recently – they completely took over failed bank IndyMac, and organised the deals that saw Wachovia taken over by Wells Fargo and WaMu by JP Morgan Chase, without any depositors losing money.

She stands a chance of working with Obama or McCain – a lifelong Republican, she is nevertheless heavily pro-regulation, and Obama would undoubtedly gain kudos for hiring a Republican woman. She’s wary of Wall Street, having risen through Kansas banking to be snapped up by Washington. This placing of country before boardroom was shown during the Wachovia deal – she didn’t hesitate to gazump Citigroup’s original bid at the eleventh hour (it even had a time arranged for signing and sealing) after Wells Fargo approached with a higher one. This got some people riled up, and sent the two banks into a tizzy of suit and countersuit, before calming down; Bair had meanwhile acted in order to best instil confidence in the economy and secure the deposits of ordinary people.

She has recently been vocal about the deficiencies of Paulson and co in addressing the needs of individual borrowers in this crisis. Another string to her bow is her time as chair of the futures regulatory body, the Commodity Futures Trading Division, means she has a firm grasp on the nature of derivatives, which, after being poorly regulated for years, begun all of this mess. 

She can talk straight too, having written two books for children about the importance of saving, the dangers of debt, and how to persuade people to invest in your car-washing business so you can pay them back and buy that doll you’ve always dreamed of. I bet her kids make way more that I do.

The strain placed on the FDIC will surely only increase as more banks could be forced to default, but even if the body faces some hard times and has to ask the Treasury for more money, it is unlikely that Bair will shoulder the blame. If she is appointed, the age of private financiers in government positions will be seen to have drawn to a close.

Posted by Ben Beaumont-Thomas in Hot Money | October 28, 2008 10:14AM |