The Bair Facts
Rarely do we hear unvarnished talk from Washington’s insular political scene, much less from those responsible for regulating the financial industry. Indeed, demure dialogue is more often the rule as regulators navigate a web of stakeholders and interests, all while under the watchful eye of a financial media, a Congress, and a powerful Washington lobby intent on examining their every move. Matters have only intensified in the post-Dodd-Frank era. The tension can be unyielding when toeing the line between market and investor protection on the one hand, and facilitating competitive and innovative markets on the other.
However, there are a number of policymakers who represent a new era in financial regulation. People who are direct and forthright about the constant battle between market integrity and laissez-faire capitalism. Granted, it is easier to call out bad industry behavior and be frank about regulatory shortcomings in the wake of a record financial crisis. No risk of shattering any illusions there.
Yet, one regulator in particular has a refreshing knack for telling it like it is. Both before the financial mischief hit the fan and throughout the bailout response, FDIC Chair Sheila Bair has been interchangeably cautionary, precise, and visionary in her views on “too-big-to-fail” institutions, the moral hazard of bailouts, and the Volcker Rule’s aim to limit banks’ extra-curricular business activities.
Most importantly, she has trumpeted the need for regulatory courage. And, as memories of the crisis fade, this is all the more important. “The best they (regulators) … can hope to achieve is the knowledge that they exercised the statutory authority entrusted to them in good faith and to its fullest effect in the interest of financial stability, without regard to the political consequences,” Bair recently told the House Subcommittee on Financial Institutions and Consumer Credit.
Bravo. She couldn’t have said it better.
