Head of FDIC Stepping Down and some of her parting comments and warnings

Sheila says goodbye to the ABA


Submitted by Bruce Krasting on 03/16/2011 13:09 -0400
I have gone both ways with Sheila Bair. I have criticized some of what she has done and applauded others. She gave a speech to the America Bankers Association today. She summed things up pretty well. Early on in the presentation she made this significant remark:
This may be my last opportunity to speak with you before the end of my term in June.
Read this to mean that she is out. This is a big job that requires a transition period. A new FDIC head has to be named soon. Given the politics of this position and the daggers being bandied about in D.C. I think this has to come by 4/30. Just six weeks away. Should be interesting.
Given that this was her last opportunity to address all the big bankers in one room it was a good time for Sheila to beat up on the audience:
I would like to propose to you a radical-sounding notion. And it is that increasing the size and profitability of the financial services industry is not – and should not be – the main goal of our national economic policy.
Apparently this woke the audience up. Guys were choking on their bagels. This must have also gotten the coffee cups rattling:
My reading of recent polling data on how the public views banks also speaks to the need for a different approach from your industry. In April 2010, a Pew Research poll found that just 22 percent of respondents rated banks and other financial institutions as having “a positive effect on the way things are going in this country.”
This was lower than the ratings they gave to Congress, the federal government, big business, labor unions, and the entertainment industry.
She warned the banks:
What is important for you to recognize is that this type of reputation risk will eventually have implications for your bottom line and the confidence of your investors and customers.
All this is old news to Zero Hedge readers. But it's a pretty big deal when the outgoing head of the FDIC says it.
Notes:
(I) We have not seen the last of Ms. Bair. I don’t think she is a presidential candidate, but she would make a good VP. Her name is on this list. She might be our next Treasury Secretary. I’m "ABT" (anyone but Tim). She could also run the Fed. Bernanke has erred with QE2. He will take heat for the inflation that is brewing. It just might be that he goes back to Princeton in a year. Her name is definitely on that list.
(II) I finally got around to dumping my accounts with the big banks. I am now with a Community Bank. They do everything the big slobs do. They don’t have branches on every corner. Who cares? Community Banks are now lending. The big guys are not. Their deposit rates are better. Plus you get to say “screw you” to a Morg, a Citi or a BoA.