We said it before and we’ll say it again: right now Sheila Bair is probably the most powerful financial regulator in Washington. Tim Geithner’s rough confirmation hearing has him limping into office, and it will be weeks before he’s up to full speed with his new staff. Ben Bernanke is hampered by the zero interest rate and the need to confer with Fed governors and presidents. Forget the SEC.
So how’s Bair using her power? Wisely. Instead of expending it on getting this or that program in place, she’s using it to permanently seat herself on top of the regulatory pyramid. How’s she going to do this? She’s planning on running the Aggregator Bank.
FDIC Chairman Sheila Bair is pushing to run the operation, which would buy the toxic assets clogging banks’ balance sheets, one of the people said. Bair is arguing that her agency has expertise and could help finance the effort by issuing bonds guaranteed by the FDIC, a second person said. President Barack Obama‘s team may announce the outlines of its financial-rescue plan as early as next week, an administration official said.
“It doesn’t make sense to give the authority to anybody else but the FDIC,” said John Douglas, a former general counsel at the agency who now is a partner in Atlanta at the law firm Paul, Hastings, Janofsky & Walker. “That’s what the FDIC does, it takes bad assets out of banks and manages and sells them.”