Everyone from Wall Street to Washington is buzzing about former FDIC chair Sheila Bair’s new tell-all about the financial crisis, ‘Bull By The Horns: Fighting To Save Main Street From Wall Street And Wall Street From Itself.”
In her capacity as FDIC chair, Bair writes, her main focus was ensuring that banks had adequate capital to save themselves in the event of another disaster, destroying ‘Too Big Too Fail’, and giving smaller banks a fighting chance at survival — A difficult job, and one that’s sure to put a strain on one’s relationships, to say the least.
Luckily for us, Bair isn’t afraid to talk about those strains. She hits three people especially hard in the book. Let’s go over them.
#1 Treasury Secretary Tim Geithner
Bair writes that she and Geithner had fundamentally different views on how to save the economy. Bair, as she tells it, was out to save the little guy while Geithner constantly looked out for the banks, promoted holdovers from the days of Greenspan-esque deregulation, and brushed the FDIC aside.
Here’s an excerpt in which Bair talks about how Geithner stymied an FDIC loan program that would have allowed a combination of TARP and private capital (from investors like Warren Buffett and Bill Gates) to buy bad assets using a “competitive public auction process. This is called a public-private investment partnership (PPIP):
Our loan program — which required both Fed and Treasury approval — languished. Though Ben was supportive and the Fed had approved the launch of our program, Tim twiddled his thumbs. In fact, despite repeated attempts on my part, he never approved the launch of the program as required under the statutory process… it was just another example of Tim refusing to cede authority to us over cleanup programs, even though we had the best experts in the world on the subject. I think the recovery would have been much stronger if he had just let us do our job.
#2 Andrew Ross Sorkin
The New York Times journalist had a part in foiling Bair’s PPIP plan as well. In fact, as she tells it, Sorkin attacked her a few times and didn’t always get his facts straight.
Here’s what happened when he interviewed Bair for a story about the PPIP program:
He (Sorkin) hadn’t seemed hostile about the program, and I expected a fair and balanced story, However, when the Sorkin column came out the next day, it was very negative — not just about the program but about me personally…. It accused me of saying tha the PPIP had “no risk” — which I had most certainly never said — and in a particularly low blow, compared me to Joseph Cassano…at AIG…Andrew (Bair’s staffer) as upset as I was, e-mailed a somewhat stern protest to Sorkin who read it on his BlackBerry while he was appearing on Morning Joe and announced on air that Andrew was threatening him (he wasn’t).
Bair later confronted Sorkin about inaccuracies in his reporting who had “no good responses” but also “didn’t acknowledge he’d done anything wrong.”
#3 Car Czar Steve Rattner
Geithner hired Rattner to handle the auto-bailout in 2009, at which point, Bair admits, she didn’t know much about the New York financier. She introduces him in her book, though, by pointing out that he had been fined and barred from the securities industry for his involvement with disgraced New York State Senator, Alan Hevesi.
That pretty much sets the tone for what comes next. Bair’s account of her dealings with Rattner paints him as a really vindictive, nasty person. Here’s what happened when Bair said the FDIC would not guarantee bad GM debt through its Temporary Liquidity Guarantee program (it was already guaranteeing about $330 billion from banks).
Rattner clearly thought he was entitled to whatever help he wanted from the FDIC, and he and Tim both threatened to publicly bash me for getting in the way of the GM deal…In the end, everyone got what they wanted but Rattner lived up to his nasty reputation by attacking me in his book, Overhaul: An Insider’s Account of the Obama Administration’s Emergency Rescue of the Auto Industry. His version of the events was that I was some kind of Washington insider trying to wheel and deal for power and advantage…He clearly felt that the government purse was supposed to be readily available to him, and anyone who got in his way was the target of scorn and derision.
So there you go…
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