Business and Finance NEWS

The news maker FDIC and Chairman Sheila C. Bair: significant latitude

By Amarendra Bhushan for CEOWORLD Magazine Updated:October 10, 2008 Become a writer!

FDIC Chairman Sheila C. Bair said, “The enactment of this legislation should ease fears among the public and financial institutions that have created uncertainty and disruption in the credit markets. As mandated by the statute, the FDIC will consult closely with the Treasury Department on the implementation of this new law.

“I am particularly pleased that the bill includes provisions for loan guarantees and credit enhancements on whole loans. This authority has the potential to permit innovative efforts to facilitate loan modifications and avoid unnecessary foreclosures. It has the ability to create incentives to leverage the private sector with minimal initial cash outlays.

“Temporarily raising the deposit insurance limits should address public confidence issues and provide additional liquidity to banks. As always, any potential borrowings from Treasury to support this additional coverage would need to be paid back from the FDIC’s traditional funding mechanism – industry assessments.”

In another news, The Federal Deposit Insurance Corp. said it has “significant latitude” to support banks and their depositors using powers that require Federal Reserve and Treasury approval. A temporary increase in insured deposits to $250,000 that was part of the U.S. bank rescue plan, signed into law last week, “will provide the dual benefits of providing additional liquidity to banks for lending as well as provide some additional reassurance to depositors above the current limits,” Gray said.

The bank rescue that lets the U.S. buy $700 billion in troubled assets also allows the FDIC to borrow from the Treasury “an amount or amounts necessary” to insure deposits, temporarily lifting a $30-billion limit.

Sheila C. Bair

Board of Directors & Senior Executives
Federal Deposit Insurance Corporation (FDIC)

Sheila C. Bair was sworn in as the 19th Chairman of the Federal Deposit Insurance Corporation (FDIC) on June 26, 2006. She was appointed Chairman for a five-year term, and as a member of the FDIC Board of Directors through July 2013.

Before her appointment to the FDIC, Ms. Bair was the Dean’s Professor of Financial Regulatory Policy for the Isenberg School of Management at the University of Massachusetts-Amherst since 2002. Other career experience includes serving as Assistant Secretary for Financial Institutions at the U.S. Department of the Treasury (2001 to 2002), Senior Vice President for Government Relations of the New York Stock Exchange (1995 to 2000), a Commissioner and Acting Chairman of the Commodity Futures Trading Commission (1991 to 1995), and Research Director, Deputy Counsel and Counsel to Senate Majority Leader Robert Dole (1981 to 1988). While an academic, Chairman Bair also served on the FDIC’s Advisory Committee on Banking Policy.

Chairman Bair’s prior work focused heavily on the banking sector. As the Assistant Treasury Secretary for Financial Institutions, she was charged with helping to develop the Administration’s positions on banking policy issues. She worked closely with Treasury’s own banking regulatory bureaus, the Office of the Comptroller of the Currency and the Office of Thrift Supervision, as well as the Federal Reserve Board and the FDIC. Ms. Bair’s teaching and research at the University of Massachusetts also dealt extensively with banking and related issues.

Ms. Bair has served as a member of several professional and nonprofit organizations, including the Insurance Marketplace Standards Association, Women in Housing and Finance, Center for Responsible Lending, NASD Ahead-of-the-Curve Advisory Committee, Massachusetts Savings Makes Cents, American Bar Association, Exchequer Club, and Society of Children’s Book Writers and Illustrators.

Five months after becoming Chairman, Ms. Bair was named to The Wall Street Journal magazine Smart Money’s (November 2006) “Power 30” list – the magazine’s lineup of the 30 most influential people in investing. Chairman Bair has also received several honors for her published work on financial issues, including her educational writings on money and finance for children, and for professional achievement. Among the honors she has received are: Distinguished Achievement Award, Association of Education Publishers (2005); Personal Service Feature of the Year, and Author of the Month Awards, Highlights Magazine for Children (2002, 2003 and 2004); and The Treasury Medal (2002). Her first book – Rock, Brock and the Savings Shock, a publication for children – was published in 2006.