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Let’s Listen to Sheila Bair

Posted by Larry Doyle on March 10, 2009 5:50 AM |

I thoroughly respect Sheila Bair (see my list of Economic All-Stars in the left sidebar). Our Head of the FDIC has been an honest broker each and every time I have heard her speak. I looked forward to her interview with Paul Gigot of The Wall Street Journal. 

Ms. Bair addresses the finer points of the Obama Foreclosure Mitigation Plan which is targeted at helping 9 million homeowners stay in their homes. Specifically she touches on:

1. how this program will not reward bad behavior;
2. how it can be viewed as helping people who have managed their finances appropriately;
3. expectations of redefaults given her experience with the failed institution Indymac.

As I initially mentioned, I believe Sheila Bair is an honest broker in an impossible position. Her seeming lack of enthusiasm does not strike me as not believing in the benefits of this program, but rather a subtle acceptance that this program can only go so far. Additionally, this type of program will have plenty of unintended consequences. Will people who are currently paying their mortgages on schedule start to become delinquent on their mortgages in order to gain the benefits of this program?

I think Ms. Bair will make the best of a bad situation. That said, no program will be totally effective. I am fully supportive of programs that will assist Americans, but don’t be fooled to think that we will get 100% return on all dollars spent.

Let’s go to the video . . .

  • Andy


    There is also an article at the WasPo today with Sheila Bair’s views.
    Have you seen it?

    • Larry Doyle

      Thanks for sharing this link. I look forward to reading it.

      In regard to her being named Treasury Secretary, That position was only a two horse race between Geithner and Summers. Rubin and team were giving the bulk of the direction.

      Would she have made a good Treasury Secretary? I do not know if she has the foreign experience that has become a large part of this job.

      She is certainly smart enough and steady enough. Is she political enough? Maybe not.

  • Andy

    Thanks for posting the video; she’s very clear and obviously has thought long and hard about the housing issue.

    LD: do you think she would have made a good Treasury Sec.?
    I thought for a while she would be named instead of Geithner.
    Maybe they didn’t b/ she’s Repub.?

    The article above is about Detox for Troubled Assets

  • rolling_thunder

    Yeah she should be Sec of the Treasury. She doesn’t miss a beat.

    Check this out:
    If you have an American Express card, beware: your card could be put on hold at any moment, even if you think you’ve made all your payments on time. That means, you won’t be able to charge anything on your Amex card.

    That’s exactly what happened to Cathy Jones, a businesswoman with three Amex charge cards. She got a call from Amex last week saying her cards were now on hold, while the company did a financial investigation to make sure she could pay her bills.

    Jones was baffled. She’s been an Amex cardholder since 1989 and can’t remember being late on a payment. So, to get some answers, Jones and I got on the phone, and called the customer service number on the back of her card…….(there’s more)

    • Larry Doyle

      Wow…Rolling, please share the balance of the story. If a situation like that does not spook somebody’s confidence I don’t know what would.

      I had heard that AMEX was willing to pay people a few hundred bucks to return their cards. Obviously AMEX feels consumer defaults are moving rapidly higher and they are being indiscriminate in trying to minimize their exposure.

      Does she have access to credit elsewhere? If so, maybe she can pick up a few hundred bucks and NEVER do biz with them again.

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