Did Sheila Bair get back at Geithner?

"Timothy Geithner, President-elect Barack Obama’s choice for U.S. Treasury Secretary, is seeking to push Federal Deposit Insurance Corp. Chairman Sheila Bair out of office."

sure, she's one of the few not-puppets in the finance part of the gov. why wouldn't geithner (the young and faithful wall street toilet cleaner) try to get rid of her?

anyway, did this clown of geithner succeeded in dumping his own house bought at the peak? i use to laugh when hearing my profs saying "we don't know how to detect bubbles"... men, they were being honest! don't know really what is more scary, thinking they were joking or knowing they were not.

Profiles in courage award along with Brooksley Born.

She probably ticked off Geithner and his Wall Street buddies suggesting that firms should be punished for being too big. For now Timmy is off balance, but not down for the count.

have a look, timmy and ben may have a rough slog ahead.

http://www.ritholtz.com/blog/2009/07/is-the-fed-about-to-lose-on-systemic-risk-legislation/

she's managing to do mods without violating contract law (servicers do foreclose when the cost of the mods is bigger than loss in a FC) and she's having only 15% rate of redefault versus 35%-50%. what's not to like?

about having to get rid of "too big to fail" institutions, that's one of the most obvious conclusions of this bubble. it annoys only those we had to bail out, why even listen to what they have to say. those players will take the whole economy for ransom if you let them.

The Fed is a trade group, not a regulator. A Fed meeting is not that different form a Cosa Nostra feud dispute. I'm stretching the truth only a little. The big banks will be having a meeting with Timmy and Ben real soon.

http://www.zerohedge.com/sites/default/files/images/7.13.09.jpg

http://executivesuite.blogs.nytimes.com/2009/07/24/you-gotta-love-sheila-bair/

You Gotta Love Sheila Bair
By Joe Nocera

On Friday, the Treasury secretary Timothy F. Geithner testified before Congress about the importance of the Obama administration’s new financial regulatory proposals — and his hope that Congress would act before the end of the year. That made the headlines, of course, but also testifying at the same hearing were other regulators, including Sheila C. Bair, the chairman of the Federal Deposit Insurance Corporation. At a time when every other administration official is dancing around what ought to be a critical subject — what to do about “too-big-to-fail” institutions — only Ms. Bair said what needs to be said: the country is poorly served by the existence of too-big-to-fail companies. Here is an excerpt from her written testimony:

We must find ways to impose greater market discipline on systemically important institutions. In a properly functioning market economy there will be winners and losers, and when firms — through their own mismanagement and excessive risk taking – are no longer viable, they should fail. Actions that prevent firms from failing ultimately distort market mechanisms, including the market’s incentive to monitor the actions of similarly situated firms. Unfortunately, the actions taken during the past year have reinforced the idea that some financial organizations are too big to fail. The solution must involve a practical, effective and highly credible mechanism for the orderly resolution of these institutions similar to that which exists for F.D.I.C.-insured banks. In short, we need an end to too big to fail.

The notion of too big to fail creates a vicious circle that needs to be broken. Large firms are able to raise huge amounts of debt and equity and are given access to the credit markets at favorable terms without consideration of the firms’ risk profile. Investors and creditors believe their exposure is minimal since they also believe the government will not allow these firms to fail. The large firms leverage these funds and become even larger, which makes investors and creditors more complacent and more likely to extend credit and funds without fear of losses. In some respects, investors, creditors, and the firms themselves are making a bet that they are immune from the risks of failure and loss because they have become too big, believing that regulators will avoid taking action for fear of the repercussions on the broader market and economy. ‪‪

And Obama is nothing but a pragmatist. Now he's backing Sheila

http://www.bloomberg.com/apps/news?pid=20601103&sid=aPoy1vPKPfrw

President Barack Obama signaled he’s open to imposing a fee on banks and other financial institutions to ensure that firms that falter because of risky transactions won’t need taxpayer bailouts.

Federal Deposit Insurance Corp. Chairman Sheila Bair has proposed creating an industry-supported fund to provide working capital and cover unanticipated losses when the government steps in to unwind a failed firm.

http://bankfailfriday.posterous.com/charlie-rose-with-the-fdics-sheila-bair

and by the way she was appointed by George Bush