FDIC Chief Earned Rep As A Consumer Advocate

Sheila Bair is stepping down as one of the most high-profile chairmen of the FDIC. Bair, a Republican, transformed herself as a populist that fought both Republican and Democratic administrations to try to push her policies through.

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The woman who has been the face of the Federal Deposit Insurance Corporation steps down early next month. Sheila Bair has run the FDIC for a tumultuous five years. She warned early of the dangers of subprime mortgages and fought for more aggressive measures to get banks to modify troubled loans.

NPR's Yuki Noguchi reports on the high-profile head of a normally low-profile agency.

YUKI NOGUCHI: Sheila Bair likes seeing herself as a populist.

Ms. SHEILA BAIR (Chair, Federal Deposit Insurance Corporation): Time magazine called me the champion of the little guy, when they named me to their Top 100 list for 2008, and I did like that.

NOGUCHI: Bair saw herself as a defender of the average American at a time when she felt Washington was paying too much attention to Wall Street.

Ms. BAIR: We do relate to Main Street folks who have their deposits in banks. And it's our job, first and foremost, to protect those depositors - not to protect banks, but to protect those depositors.

NOGUCHI: Sheila Bair was born in a Kansas town named Independence. After law school, her introduction to Washington came through fellow Kansan Bob Dole. She worked for Dole during the 1980s and, at his urging, later ran for a congressional seat. She narrowly lost. She worked for the Commodity Futures Trading Commission, and she was teaching regulatory policy at University of Massachusetts in Amherst when President George W. Bush tapped her to head the FDIC.

Bair is a Republican but her pro-regulatory stance sometimes puts her at odds with her party.

Ms. BAIR: In the early to mid-2000s, deregulation had been in vogue for a long time and we clearly went too far with that and forgot that, you know, I'm all for free markets but I'm not for free-for-all markets. And you need some basic rules of the road. And you need regulators - strong, robust regulators to enforce those rules of the road.

NOGUCHI: In fact, Bair's reputation as a consumer advocate made her a darling of the liberal left.

Mr. JOHN TAYLOR (President/CEO, National Community Reinvestment Coalition): She was like a godsend.

NOGUCHI: John Taylor is president and CEO of the National Community Reinvestment Coalition.

Mr. TAYLOR: Given that she even talked about the issues that we cared about, that she was vocal about them and often on the same side of the ledger as consumer advocates - so yeah, I mean it was a breath of fresh air and we're going to really miss her.

NOGUCHI: Bair was both independent and vocal about her views. She locked horns with Treasury Secretary Timothy Geithner and his predecessor, Henry Paulson. During the crisis, Bair pushed Paulson to invest bailout funds to modify millions of troubled mortgages. She lost that argument. Bair generally is not a believer that banks are too big to fail and reportedly fought with Geithner over which ones needed bailouts.

As part of recent Wall Street reforms, Bair's FDIC gained the power to monitor and, if necessary, unwind troubled non-bank institutions. Bair argued it's an important way to manage systemic financial risk. But Bair's positions have angered the banking industry.

Mr. BERT ELY (President, Ely & Company): Well, I'm not a fan of Sheila Bair's.

NOGUCHI: Bert Ely is a banking industry consultant and perhaps Bair's most vocal critic. Among his complaints: Bair's support for requiring that banks set aside more capital to offset risk.

Mr. ELY: Under Sheila, the FDIC has lived up to its nickname of Forever Demanding Increased Capital. And I don't have any problem with independence, as long as it's based on sound judgment. I feel that in many cases that's not true, as far as Sheila's concern.

NOGUCHI: Responding to crises and criticism has left Bair wanting to spend more time with her family. She also plans to write a book, but won't elaborate on longer-range plans.

President Obama nominated Democrat Martin Gruenberg, the current vice chair of the FDIC, to succeed Bair.

Yuki Noguchi, NPR News, Washington.

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