Sometimes, people in government have 20-20 foresight.
Sheila C. Bair, chairman of the Federal Deposit Insurance Corporation (FDIC) from 2006 until July of this year, warned as early as 2001 about abuses in subprime lending. She continued to sound the alarm about the mortgage industry and foreclosure practices as the country headed into the mortgage crisis in 2008.
Bair’s outspokenness didn’t make her a favorite with members of the banking industry, but she wasn’t concerned about making nice with Wall Street. Her job was to protect depositors and help shore up the financial system. She pushed hard for an aggressive mortgage-refinancing program to help homeowners in financial straits, managed a number of very large failed institutions at the height of the crisis, and played a key role in crafting financial reforms eventually approved by Congress.
Although Bair rose to a powerful position in the financial world, she remembered well what it was like to toil at lower-level jobs. She was a bank teller before heading to law school at the University of Kansas and started in the federal government as a GS-11 attorney.
As FDIC chairman, she made sure to encourage input from front-line employees. “I do understand how people feel lost in the shuffle or not appreciated as much as they should be, and I try to bring those things to my management style,” she said.
During quarterly conference calls with employees, anyone was able to ask questions and do so anonymously if they chose. She started a culture-change initiative at the agency so that executives would engage with employees, solicit feedback and listen to their views. She believed that by empowering those employees, management would receive insights that could influence positive changes at the agency.
Born in the town of Independence, Kan., Bair admits that she can be “brutally direct,” a trait she says she picked up in the 1980s while working with another Kansan, Bob Dole, the state’s former senator and a fellow Republican. But she believes that people appreciate the clarity that comes along with that bluntness.
The FDIC, normally a low-profile agency, held a prime spot during the financial crisis. They were tough years, but Bair impressed upon her staff the importance of the agency’s mission —protecting customers’ deposits.
When dozens of banks were failing and other sectors were destabilizing, the FDIC worked to keep savings safe and maintain confidence in the banking system. In October 2008, Congress raised the amount of savings the agency would guarantee to $250,000 from $100,000 per depositor, a change that was extended in July 2010 when President Obama signed the Dodd-Frank bill instituting Wall Street reforms and consumer protections.
“The FDIC has a long history of stability and safety,” said Bair. “No one has ever lost a penny of insured deposits.”
Bair, who was once an “answer” on the TV quiz show “Jeopardy,” now has taken the opportunity to step away from her role in a world of financial upheaval. She has said she plans to write a book. She already is a published author of the children’s book, Rock, Brock and the Savings Shock, about—what else?—saving money.
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