by Sheila Bair
elections:
of 2008, 128–29, 141
of 2012, 357, 381n
Ellis, Diane, 23, 233
Emanuel, Rahm, 142–44, 177, 183, 189, 191, 214, 216
Enron, collapse of, 12
Epstein, Keith, 208, 210
equity, 349
private, 170
equity capital, 221
loss-absorbing capability of, 370n
Eurobank, 281–82
Europe:
banking system of, 123, 221, 327, 335
Basel II in, 30–40, 257–58, 263, 265
guaranteed holding company debt in, 113
leverage of banks in, 33, 40, 220, 263, 356
recession in, 31
sovereign debt crisis of, 220–21, 257, 260, 265
European Central Bank (ECB), 261
European Union (EU), Basel II supported by, 33–35
Exchange Stabilization Fund, 108
executive compensation, restrictions on, 5, 203, 205, 242, 324
Fannie Mae, 51, 55–56, 70, 119, 124, 135, 147, 149, 151, 184, 244, 347–48, 386n
Farrell, Diana, 148
Farwig, Pamela, 298–99
Federal Deposit Insurance Corporation (FDIC), 2, 165, 251, 280, 357
achievements of, 355–56
Advisory Committee on Banking Policy of, 32
in anti-bailout legislation, 181–99
assessments by, 335–36
bad-bank program proposed by, 165, 166–67
bailouts resisted by, 184, 185, 195, 197, 214–15
Bair as chairman of, 1, 7, 332, 339, 355
Bair’s appointment to, 11, 12–16, 297, 300, 339
Bair’s departure from, 311–21, 359, 361
banking system liability guarantees pushed for, 111–15
Basel II opposed by, 30–40, 145, 193, 237–38, 356, 357
Basel III regulations and, 257–72
board of directors of, 21, 365n
BofA bailout and, 126–28
capital regulation by, 260
cash needs of, 277
CFI of, 232
Citi bailouts and, 121–26, 171–72
Citi-Merrill deal and, 126–29
Citi’s proposed stock deal with, 101–3
concern about subprime mortgages at, 49–51, 53–58
consumer compliance at, 232
credit line of, 110, 177, 377n
Culture Change Council at, 19–20
debt guarantee program of, 4–5, 6, 111–20, 126, 131, 169, 176, 178–79, 187, 201–2, 208, 287, 301–2, 355, 374n
deposit insurance premiums, 14, 21–25, 82, 100
Division of Administration at, 19
Division of Insurance and Research (DIR) of, 23
Division of Resolutions and Receiverships at, 20
Dodd-Frank financial reform law and, 119
economists at, 198
emergency lending program of, 207, 215–16
employee morale problems at, 16–20
examiners at, 168, 170, 173, 177
External Affairs office of, 195
failing financial institutions resolved by, 74–75
FSOC and, 308n
funding for, 22, 176–77, 184, 215, 217–19, 226–27, 233, 300–301, 312, 315, 335–36, 340, 353
in GM bailout, 175–77
guarantee of, 155, 169
history of, 12
Hohlt and, 208
as independent agency, 143
IndyMac failure and, 80–82
inspector general of, 92, 163, 184, 211, 283–84
insurance function of, 12–13, 27–28
insured deposits and, see insured deposits
least-cost test of, 101–2
on loan restructuring, 65
loan restructuring proposals of, 131–39, 147–51
loss protection for, 101–2
loss-sharing agreements of, 244–45
media and, 297–310
MERIT at, 18–19, 20
minimum reserve requirements of, 227–28
mortgage guidance threat by, 47
new administration’s grilling of, 144–45
no confirmed head for, 345
nonbank entities and, 182–99
Office of the Inspector General (OIG) at, 17–18
offices of, 15
on overdraft fees, 312, 314, 336
“pay-for-performance” system at, 18, 20
perfect record on protecting money by, 83
proposed regulatory legislation and, 182–99, 213–29
public confidence and, 117, 292, 313
public interest protected by, 195
regional offices of, 311–12
regulation authority of, 13, 185–86
regulation of state-chartered institutions by, 213
reserves of, 22, 23, 25, 103, 118
resolution process of, 58, 75, 85, 91–92, 96, 99, 118, 119, 123, 159, 169, 182–85, 187–88, 190–91, 194–95, 198, 240–41, 273–91, 298–99, 305, 326, 328, 356, 370n
Resolution Trust Corporation (RTC) and, 115
restructuring authority of, 329–30
risk assessment by, 233
risk to, 91
rules for officials of, 210
on securitization, 60, 304
short-term funding needs of, 110
smaller bank closings and, 273–95
staff of, 16–17, 214, 343–45
and stress tests, 156, 159–60
stronger lending standards pushed by, 57–58
Systemic Resolution Advisory Committee of, 327
transparency policy at, 232–33, 299
Treasury line of credit for, 110, 177, 217–18, 294, 300
troubled assets PPIPs of, 158, 161–64
troubled banks list of, 78–79, 89, 168–69, 171–73
troubled-loan cleanups by, 162
and unwinding of 2008 Treasury bailouts, 201–8
Wachovia crisis and, 95–105
and WaMu difficulties, 83–94
Federal Home Loan Banks (FHLB) system, 79–80, 84–85, 90
Federal Housing Agency (FHA), 136, 245, 250, 345
Federal Housing Finance Agency (FHFA), 135, 147, 235, 244
Federal Reserve Act, 377n
Federal Reserve Board, 4, 16, 73, 75, 183, 235, 280, 326–27, 345, 349, 352, 356, 366n–67n
antipathy to regulation at, 27, 41, 48
bank holding companies and, 183, 201, 258
Basel II and, 31–32, 34, 38–39, 47
Basel III and, 261–62, 264, 266–69
Board of Governors of, 86, 145
BofA’s Merrill acquisition approved by, 127
CIT and, 178
Citi and, 90, 125, 168, 172–73
consumer issues at, 49–50
consumer rules written by, 336–37
deregulation supported by, 187
discount window lending by, 28, 74, 90–91
on dividend increases, 256
dividends and, 246
emergency lending programs of, 215–16
FDIC’s need to cooperate with, 27
foreclosures and, 245, 247–48, 253
HOEPA authority of, 48, 50
holding companies and, 185
ideology of market forces at, 41, 48
large institutions and, 159–60, 185–86, 243
Lehman Brothers failure and, 107
lending by, 357
monetary policy of, 350
proposed regulatory legislation and, 182–99, 213–16, 218, 220–23, 225, 237–42
regional banks of, 31
regulatory capture and, 185
regulatory failures of, 183, 187
regulatory function of, 13
restructuring authority of, 329–30
securities PPIP of, 161–64
stress tests proposed by, 155–61
subprime lending and, 49, 67
supervision by, 341
13(3) authority of, 214
23A waiver by, 17
6
unlimited banking guarantee and, 111–13, 115, 116–20
and unwinding 2008 bailouts, 201, 203–7
Volcker at, 222
Wachovia and, 96–101, 103, 105
on WaMu situation, 86, 89
and winding down of 2008 bailouts, 201, 203, 207
Federal Reserve System, 366n
regional banks of, 31, 188, 366n
see also specific regional banks
Federal Savings and Loan Insurance Corporation, 365n
Federal Trade Commission (FTC), 244
Feingold, Russ, 228
Feldstein, Martin, 135, 138–39, 372n
field preemption, 50–51, 368n
finance companies, 227
Financial Company Resolution Fund (FCRF), 196
Financial Crisis Inquiry Commission (FCIC), 48, 93, 124–25
financial holding companies, 117
financial industry:
damage to reputation of, 7
regulation of, 6–7, 8, 21
Financial Institutions Regulatory Agency (FIRA), 213–14
financial market utilities, 214
Financial Services Forum, 192
Financial Services Roundtable, 24, 192
Financial Stability Oversight Council (FSOC), 239, 249–51, 337–39, 353
Financial Stability Plan, 155–64
Financial Times, 8, 159, 178, 266
Financial Times Magazine, 305
Fine, Camden, 188–89, 293, 315
First Amendment, 307–8
Fisher, Richard, 188
Fishman, Alan, 89–90
flipping, flippers, 52, 67, 69, 92–93, 278
Florence Savings Bank (FSB), 209
Florida, 53, 283
Forbes, 309
foreclosure crisis, 58, 60, 150–51, 249
foreclosures, 7, 67, 253, 304, 319
documentation for, 248
housing, 47, 69–71, 117
independent claims commission for, 250
losses to lender in, 59
military personnel and, 254
moratoriums on, 243–44
overenforcement of, 243–52
rates of, 147
robo-signing of, 243–47, 338–39
securitization and, 60–66, 71, 133, 136, 332
super mod for, 250–51
unnecessary, 236, 249
wrongful, 243–54
Fortune, 309
Fortuño, Luis, 281
Foster-Massey, Margaret, 320–21
Fox Business Network, 288
France:
Basel II supported by, 33–35
Basel III discussions and, 260–67, 271
Frank, Barney, 26, 50
Bair and FDIC supported by, 144, 192
Bair’s meeting with, 184–87
on banking regulation, 183–87, 189, 193, 195, 197–98, 224
Frankfurt, 259
Fratto, Tony, 139
Freddie Mac, 51, 55–56, 70, 119, 124, 135, 147, 149, 151, 184, 244, 347–48, 386n
free enterprise, 4, 300–301
free market, 134, 135, 139, 147
free rider problem, 22
French, George, 31, 220, 259
Friend, Amy, 226
Fritts, Steven, 45
Frost, Robert, 359
Frye, Daniel, 165
full faith and credit, 82
futures markets, agricultural, 342
G7, finance ministers and central bank heads of, 113
G20 countries, 257, 261, 263, 266, 267
G30 international banking group, 205, 262
GAO, annual FDIC audits by, 184
Garn, Jake, 25
Gasparino, Charles, 288
Gates, Bill, 157
Gbowee, Leymah, 308
GDP growth, 157
GE Capital, 118
Geithner, Timothy, 74, 86, 88, 119, 149–50, 177, 244, 250–51, 256, 294, 301, 335, 353, 362
AIG bonuses and, 181–83
appointed as Treasury Secretary, 124, 142–44, 363–64
bailouts supported by, 175, 179–80, 183, 199, 355
at Bair’s farewell party, 318–19
Bair’s philosophical differences with, 99–100, 110–11, 113, 283, 304–5, 363–64
Bair’s removal sought by, 143–45, 147–48
on Basel III, 258–59, 266–67, 269–70, 356
Citi and, 122–25, 165, 166–67, 169–71
Financial Stability Plan of, 155, 158–59, 161, 163–64
GMAC and, 175–76
at New York Fed, 2, 4–5, 158, 186
on regulatory proposals, 181–83, 186–91, 196–98, 214, 216–22, 224–29, 235–36, 239–40
Senate confirmation of, 147
TARP funds and, 115–17
and TARP repayments, 201
Wachovia crisis and, 96, 99, 105
General Electric (GE), 118, 176
General Motors (GM), bailout of, 175–77, 358–59
General Motors Acceptance Corporation (GMAC), 172, 175–76, 180, 246, 252, 369n
Mortgage, 243
Residential, 246
Gensler, Gary, 142, 147
Georgetown Law School, 40, 145
Germany, 309
Basel II supported by, 33–35
Basel III discussions and, 260–68, 271–72
Gerspach, John, 173
Giamatti, Paul, 319
Giannoulias, Alexi, 283
Gigot, Paul, 300–301
Glass-Steagall Act, 328, 385n
global settlement, 255
Golden West, 43, 76
Goldman Sachs, 2–3, 4, 5, 6, 68, 86, 95, 107, 114, 142, 175, 176, 179, 269
ShoreBank and, 287–88, 290
Goldschmid, Harvey, 37
Goldstein, Jeffrey, 235
Goodman, Alice, 15
government capital investments, 4
government-sponsored enterprises (GSEs), 55–57, 137, 151, 184, 345, 347–48, 359
debt securities for, 119
Gramlich, Ned, 49–51
Grassley, Chuck, 224
Gray, Andrew, 81, 92, 163, 208, 282, 298, 300, 306
Great Depression, 9, 55, 135, 155, 291, 328
FDIC and, 12
Home Owners’ Loan Corporation (HOLC) in, 115
Great Recession of 2008, 8, 55, 71, 273, 276, 281, 285, 291, 325
Greece, 257, 265, 352
Green, Matthew, 23
green shoe, 204
Greenspan, Alan, 16, 27, 50, 187, 235, 325
Gruenberg, Martin, 13, 21, 23, 101, 112, 311
as Bair’s FDIC successor, 318
on Basel II, 31–32
Grundhofer, Jerry, 171–74
Guardian, 8
Hardnett, Brenda, 15
Hartigan, Frank, 245
Hawke, Jerry, 50
HBO, 319
Heath, David, 208, 210
hedge funds, 51, 55, 56, 122, 157, 187, 216, 217, 227, 326, 334, 353, 369n
new banks chartered by, 277–78
speculative, 227
Heid, Mike, 64
Helms, Jesse, 346
Hensarling, Jeb, 195
Heritage Community Bank, 298–99
Herring, Richard, 366n
Hess, Jim and Audrey, 299
Hevesi, Alan, 175
Hildebrand, Philipp, 263, 264–65, 381n
Hoenig, Thomas, 188, 385n
Hohlt, Richard, 208
holding companies, see bank holding companies; thrift holding companies
Home Affordable Mortgage Program (HAMP), 149–53, 154
home owners, home ownership, 349–50, 355
as low priority, 153, 304
preservation of, 249
Home Ownership Equity Protection Act (HOEPA), 48, 50
Home Ownership Preservation (HOP) loans, 71, 138, 372n
Home Owners’ Loan Corporation (HOLC), 115, 155
Hong Kong, 280
Hong Kong Monetary Authority (HKMA), 280
Hope for H
omeowners, 136
Hope Now alliance, 68–70
House of Representatives, U.S., 342
Agricultural Committee of, 342
Appropriations Committee of, 342–43
financial reform bill in, 191–92, 199, 213, 217, 219, 222–29
Financial Services Committee of, 26, 183, 342, 343
Judiciary Committee of, 193–95
TARP in, 93
see also Congress, U.S.; Senate, U.S.
housing, 340
affordable, 55, 56, 57
market downturn in, 26, 62, 67, 76, 115, 273, 339, 347, 359
shorting of, 369n
subsidization of, 348
Housing and Urban Development Department (HUD), 56, 144, 244, 249
stronger lending standards recommended by, 50
housing bubble, 8, 42, 44, 53, 57, 283, 349
housing prices:
decline in, 26, 46–47, 52, 57, 133–35
foreclosures and, 133, 134
loan restructuring and, 250–51, 304
HSBC, 330
Hubbard, Glenn, 135
Huffington, Arianna, 208
Huffington Post, 208, 325
Huffington Post Investigative Fund, 208, 307
Huntsman, Jon, 357
Hurt, William, 319
hybrid ARMs, 44–47
delinquencies on, 62
modifications for, 62–71
refinancing of, 44–46
hybrid debt, 225, 258, 264, 349
for small banks, 221
Hyperion Group, 64
Illinois, 283, 284, 298
Illinois Department of Financial & Professional Regulation, 285–86
Immelt, Jeffrey, 118
income documentation, 80
Independent Community Bankers of America (ICBA), 188–89, 215, 293
Bair’s farewell to, 312, 315–16
India, 263
industrial loan charters (ILC), 25
industrial loans, 43
IndyMac Bank, 75, 79–82, 84–85, 92, 95, 274–75, 298
mortgage loan restructuring for, 132, 149, 151–52
sale to investment consortium of, 279
supposed high redefault rates for, 144–45, 152
In Fed We Trust (Wessel), 98
Ingrassia, Larry, 163
insolvency, 84, 89
insolvent institutions, mandatory receivership for, 197
Institute of International Finance (IIF), 259–60
insurance, 328, 341
insurance banks, 285
insurance companies, 51, 112, 181, 326
FDIC as, 22
insured banks, 53, 74, 79, 112, 169, 173, 175, 178, 186, 192, 197, 210, 219–20, 221, 223, 243, 246, 278, 303, 326, 329, 341, 356
assessments on, 227–28
bids on failed institutions by, 276
failure of, 238–39
financial reports filed with FDIC by, 73
investments of, 227
mortgage-backed securities purchased by, 49, 55–56, 57
regulatory history of, 278
Volcker Rule and, 222–23
insured deposits, 17, 74, 77, 81–82, 84, 85, 86, 90, 98, 100, 107, 119, 123–24, 155, 162, 169, 176, 193, 226, 273–75, 277, 282, 314, 330