By Leigh Gallagher
FDIC chief Sheila Bair gave an insightful and informative interview to CNBC anchor Maria Bartiromo in one of the Fortune Most Powerful Women Summit's headline sessions today.
Bair, No.3 on Fortune's Most Powerful Women in Washington list, spent most of the interview doing what she probably does a lot of these days -- clearing up confusion about her agency in the public view. Right off the bat, Bair disputed the notion that her agency has said that 400 banks will fail, an oft-cited figure. "Others said that," Bair said, speaking quickly and definitively, but calmly. "We don't make predictions." She said there are 412 banks on the FDIC's problem bank list, and pointed out that most of those do not fail. "But the list is getting bigger," she acknowledged. The FDIC has shuttered 92 banks this year, she said.
She also clarified what she called a "misunderstanding" in the media surrounding the FDIC's reserve fund. The press, she says, has focused on a $10.4 billion figure for the fund, but Bair says that figure is more a "net worth" figure; the funds available for bank rescues for the next 12 months, she told the audience, are $42 billion. But she said that had recently dropped from $52 billion, so "it's $10 billion lower."
She also pointed out that there are ways for the FDIC to access more funds, like increasing bank premiums or borrowing from the Treasury. In what has become a common refrain for Bair throughout the financial crisis, she explained to the audience that depositors are safe, and that when a bank is taken by the FDIC there is no risk for banking customers. "There is no way anyone is going to lose a penny over insured deposits," she said. "They never have and they never will."
Bartiromo asked Bair what she thought of the institutions that have been deemed too big to fail. Bair said the "unnecessary risktaking" that led to the financial crisis highlighted the fact that those firms have no resolutionary mechanism: a set of "tools to depose them, put them into receivership and wind them down" should they become troubled. She said what was needed was a law that would provide those banks with a framework so they can be put into receivership, much like FDIC-insured banks. "Unless you make it clear to these institutions that they're going to have pain [or] there's going to be trouble" if they take too many risks, she said, "you're going to have a bad situation."
Bartiromo also asked Bair what it was like to be a woman at the table often dominated by men. "You have to speak up," Bair said, "and it can be frustrating." She said sometimes the better way to be heard is by going public, the way she did when she criticized the Obama administration's loan modification plan earlier this year.
I'm just back from a funeral in Pennsylvania -- where I traveled late last night after the Time 100 gala at Manhattan's Time Warner Center. Strange to say, but two wonderful celebrations back to back. The funeral was for my closest childhood friend Meg's father, Jack Denuel, who died after a three-decade battle with MS. He was a great man who never whined and never said a bad word about anyone. Never.
As MOREPatricia Sellers - May 6, 2009 11:53 PM ET
I'm just back from five days in Washington, D.C. (yes, I commuted against the crowds this morning) and I'm feeling "the new era of responsibility" that President Barack Obama spoke about in his inaugural address today. This responsibility is power. It's also quite a burden. Are you feeling it too?
On Friday, I had a keen sense of it when I was meeting with Sheila Bair, the chairman of the FDIC. MOREPatricia Sellers - Jan 20, 2009 3:35 PM ET
"There are some people in the Republican Party who resent the idea of helping others. But the market is broken right now, and unless we intervene, these people and the economy won't be helped."
-- FDIC chairwoman Sheila Bair in today's New York Times. The voice in Washington for millions of homeowners facing foreclosure, Bair insists that economic recovery depends on their rescue, financed by billions in taxpayer dollars. As the MOREJessica Shambora, Writer-Reporter - Dec 11, 2008 5:18 PM ET
"It started with housing. It will end with housing."
- FDIC Chairman Sheila Bair this afternoon at the Fortune 500 Forum in Washington, D.C. Bair talked about the need for the federal government to deploy some of its billions to help reduce foreclosures. She hit a wall with her recent $24 billion loan-modification proposal (Treasury Secretary Hank Paulson, who spoke here yesterday, refused to divvy TARP bailout funds for that), but MOREPatricia Sellers - Dec 2, 2008 4:41 PM ET
"You don't have to be a financial wizard (or go on a TV show) to become a millionaire. As Rock finally learned, you just have to stop spending all your money and save."
-- FDIC chairman Sheila Bair, in Rock, Brock and the Savings Shock, a children's book that she wrote in 2006. Bair's book is about twin boys who responded to their Grandpa's savings proposal in opposite ways. Brock saved. MOREPatricia Sellers - Nov 14, 2008 5:43 PM ET
It's hard to be hopeful. Turmoil in the financial markets is spreading geographically and psychologically. The Dow closed down 508 points today. At last week's Fortune Most Powerful Women Summit, we heard plenty about stress and sleep deprivation -- starting with Warren Buffett's comments on a clearly exhausted Treasury Secretary Hank Paulson. Sallie Krawcheck, who is leaving her high-level post at Citigroup (C), and Barclays Capital (BCS) vice chairman Barbara Byrne MOREJessica Shambora, Writer-Reporter - Oct 7, 2008 7:22 PM ET
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