by Sheila Bair
Parsons, Richard, 166, 171–74, 208, 320
Partnership for Public Service, 344
Paulson, Henry “Hank,” 67–68, 86, 89, 92–93, 158, 176
Bair’s farewell party and, 317–19
Citi and, 122–28
loan modification program of, 134, 137, 139, 372n
TARP capital program and, 116, 131–32, 210
unlimited guarantees and, 108–13, 118–19, 301–2
Wachovia deal and, 100–101, 103
and Wall Street bailouts, 1–2, 4–6, 142
Paulson, John, 279
payment processing, 328
Pearce, Mark, 232
Pearson, Patrick, 35
Peek, Jeffrey, 178
Pelley, Scott, 298
pension funds, 12, 51
Perella Weinberg Partners, 203, 205–6
Pfeiffer, Michelle, 309–10
Phoenix, Ariz., 82–83, 149–50
pick-a-pay loans, 43, 339–40
Plame, Valerie, 208
PNC Bank, 173, 287, 318
TARP repayment by, 205
Podesta, John, 141–42
Portugal, 257, 265
Powell, Donald, 13, 31, 318
preferred shareholders, 167, 169, 202
preferred stock investments, 166
prepayment penalties, 336
Prince, Chuck, 122
principal forebearance, 132–33
principal write-downs, 132
private equity, new banks chartered by, 277–78, 279, 305
private-equity funds, 227, 279, 326
public-private investment partnerships (PPIPs), 157–58, 161–64, 170, 301
in S&L crisis, 157
for securities, 161–64
for troubled assets, 161–64
public service ads (PSAs), 83–84, 86
Puerto Rico, banking failures in, 281–83
put-back risk, 54, 57
Quadrangle Group, 175
qualified residential mortgages (QRMs), 234–35, 236, 237
Ranieri, Lewis, 64
ratings agencies, 56, 165–66, 328
Rattner, Steven, 175–78
Reagan, Ronald, 360
real estate, commercial, 42
real estate assets, 156
recession, 155–56, 157
Reconstruction Finance Corporation (RFC), 155
redefault, 250
OCC report exaggerating rates of, 137–38, 145, 148, 153
risk of, 59, 133, 136
redefault insurance, 137
Reed, John, 173, 207, 250, 270
refinancing, 52, 133, 256, 349
of subprime ARMs, 44–46, 62
of thirty-year fixed mortgages, 50, 349
regulation:
antipathy to, 27, 41, 304, 314, 363–64
competitiveness and, 37
economic incentives and, 323
industry self-, 27, 41, 66, 135
principles-based, 27, 37
see also deregulation, trend toward
regulatory agencies:
as career positions, 343–45
Senate confirmations for, 345–47
Rehm, Barbara, 316
Reich, John, 21, 23, 25, 80, 137–38, 318
Basel II and, 32, 38
subprime mortgages and, 46, 67, 69
WaMu failure and, 77–78, 87–90, 126
Reid, Harry, 220
Reilly, David, 221
Republican party, 21, 50, 129, 147, 227, 240, 251, 286, 332, 346, 353
Bair in, 8, 13, 129, 141, 231, 306
deregulation and, 16
as entrenched in opposition, 283–84, 381n
promarket, 195
resolution legislation opposed by, 193, 195–97, 215–17, 220, 223–24
swing votes in, 228
ResCap, 176
Reserve Primary Fund, 108
reserves, 73
resolution authority, 231, 307, 323
Resolution Trust Corporation (RTC), 115, 155
retail banking products, complexity, 232
retail brokers, 109
R-G Premier Bank, 281–83
Rhodes, William, 170, 374n
Richmond Federal Reserve Bank, 188
risk, 150, 171
analysis of, 49
assessment of, 233
differentiation of, 22
management of, 37, 43, 247
put-back, 54, 57
systemic, see systemic risk
underestimation of, 31
risk profiles, 14
premiums based on, 22–23
risk retention, 234–35, 237, 323–24, 332, 340
Roeder, Douglas, 96
Rohr, James, 173, 318
Romer, Christina, 147
Roosevelt, Franklin D., 155
Rosenblatt, Marty, 64
Rove, Karl, 208
Rubin, Robert, 2, 122, 124–25, 142, 158, 171, 196
Rymer, Jon, 17
Sachs, Lee, 179, 204
SAFE Banking Act, 385n
safe harbors, for securitizations, 233–34, 236–37, 304
San Diego, Calif., 312, 315
San Diego Union-Tribune, 299–300
S&P 500 companies, 121–22
San Francisco, Calif., 245
San Francisco Federal Reserve Bank, 87
Sanio, Jochen, 261, 268, 271–72
Santander bank, 90, 91, 281–82, 330
Sarbanes, Paul, 13, 21, 50, 318
savings and loan (S&L) crisis, 16–17, 22, 24, 38–39, 83, 84, 208, 274, 276, 297, 299, 365n
PPIPs in, 157
Resolution Trust Corporation (RTC) and, 115
SCAP, 207
Schakowsky, Jan, 288
Schapiro, Mary, 147, 152, 189, 191, 234, 235, 305
Schoppe, Bob, 282
Schumer, Charles, 37–38, 80
Schwarzenegger, Arnold, 68, 69, 310
Scotiabank, 282–83
Seattle, Wash., 76, 77
securities, 127, 312, 328, 341–42
auction rate, 95, 121
complex, 218
government, 333
mortgage-backed, see mortgage-backed securities (MBSs)
trust-preferred, 203, 258
Securities and Exchange Commission (SEC), 52, 86, 95, 147, 152, 185, 189, 191, 222, 244, 341–42, 344, 349, 356, 366n–67n
Basel II approved by, 36–37
disclosure rules proposed by, 234
enforcement action against Goldman Sachs by, 287
independent funding for, 342–43
Rattner investigated by, 175
securities brokerages, retail, 100
securities dealer operations, 169
securities firms, 74, 175
capital standards for, 186
leverage by, 193, 326
securities trading, 329
securitization, 48, 49, 51–58, 149, 347–48, 356–57, 369n
accounting of, 233–34
economic incentives distorted by, 135
foreclosures as result of, 60–66, 71
mortgage pools in, 51
reforms to, 231
reps and warranties in, 53–54
risk retention in, 324, 332–33, 364
safe harbor rule for, 233–34, 236–37, 304
of subprime mortgages, 51–58, 369n
tranches in, 51, 54, 61–63, 135, 234
securitization agreements, 133
securitization trusts, 244
Seidman, William, 83, 276, 297
Senate, U.S., 192, 199, 342, 381n
Agricultural Committee of, 342
Appropriations Committee of, 343
Banking Committee of, 13, 38, 64, 131, 144, 177, 247, 294, 316, 342, 343, 365n
cloture rule in, 261
confirmation process in, 14, 345–47, 363
financial reform bill in, 213–29, 238
Geithner’s confirmation by, 147
Judiciary Committee of, 141
Permanent Subcommittee on
Investigations of, 89, 93
resolution authority and, 188
see also Congress, U.S.; House of Representatives, U.S.
September 11, 2001, terrorist attacks, 12, 344, 377n
shadow banks, 186, 227, 313, 330
shareholders, 311, 328, 330
bad-bank structure and, 169
in banks, 28–30
dividend payments to, 245, 256
in FDIC resolution, 370n
losses absorbed by, 184, 324
protection of, 167
Shelby, Richard, 38, 64, 213, 215–16, 218–21, 227
shell holding company structures, 278
Sherburne, Jane, 103–4
Shiller, Robert, 135
ShoreBank, 283–90
short-term credit, 198–99
short-term debt, 352–53
short-term funding, 114, 218
short-termism, 317
Treasury, 352–53
short-term transactions, 336
Shriver, Maria, 310
Simpson, Alan, 353
single point of contact (SPOC), 252–53
60 Minutes, 298–99
small businesses, 150
insured deposits for, 109–10, 112, 115
small community banks, 175, 303, 315
business customers and, 112
capital standards for, 218–21, 371n
CRE regulation and, 41–43
Dugan’s scapegoating of, 100
failures of, 273–95, 298–99
FDIC premiums for, 226
as held to higher standard, 158, 159
loan balances at, 371n
loan restructuring by, 59–60
resolution authority supported by, 188–89
share values of, 331
single regulator as disastrous for, 193
superior lending of, 120, 271
SmartMoney, 309
Snowe, Olympia, 224, 229
Social Security, 351, 353
Sorkin, Andrew Ross, 100, 103, 162–63, 218, 271, 301–2, 307
South Korea, 261, 267
Spain, 91, 257, 265, 330, 334–35, 352
speculation, 55, 323, 334
real estate, 67, 69
Spitler, Eric, 38
Spoth, Christopher, 175–78, 288–89
state attorneys general, 249, 251–52, 256
state-chartered banks, 175
State Department, U.S., 142
states:
anti-predatory lending laws in, 50–51, 368n
bank charters and, 277
credit default swaps and, 356
State Street Corporation, 3–4, 5, 114
Steel, Robert, 67–68, 95–98, 103–4
Stern, Gary, 188
stimulus spending, 351
stock market, U.S., 333
stocks, bank, 28, 159
Streep, Meryl, 309
structured investment vehicles (SIV), 73–74
Stumpf, John, 98–99, 173
subprime borrowers, 67, 69–70
dismissive attitude toward, 66
subprime crisis, 175–76, 330, 333
subprime lending, 176, 178
subprime mortgages, 48, 53, 73, 74, 77, 176, 178, 304
of Citi, 56, 98, 121
delinquencies and defaults in, 37, 44, 46–47, 62, 369n
extension of starter rate on, 62–65, 68–71
large banks and, 45
loss mitigation strategies for, 63
negative amortization in, 43–44, 50
payment resets on, 44–45, 46, 50, 51, 62
performance of, 49
prepayment penalties in, 45, 50
restructuring of, 57–58, 59–71
securitization of, 51–58, 369n
see also hybrid ARMS; nontraditional mortgages (NTMs)
Summers, Lawrence, 142–45, 147, 152–53, 175, 182
on banking regulations, 188–91, 216–17
Citi and, 170
Swagel proposal favored by, 148–49
super mod, 250–51
superregulator, bank, 192
supplemental capital measures, 36
Suskind, Ron, 170
Swagel, Phillip, 136, 148–49
Swann, Benita, 15, 181
Sweden, 260
Swiss National Bank, 263
Switzerland, 35, 263–64, 269, 271
banking-to-GDP ratio of, 260
systemically important financial institutions (SIFIs), 259, 266–71, 324
systemic risk:
assistance, 113
exception, 75, 93, 99, 103, 115, 126, 128, 185
tangible common equity (TCE), 258–59, 279
Tarullo, Daniel, 40, 145, 173, 174, 203, 238–39, 241–42, 247–48, 254
Basel III and, 258, 262, 264, 266, 269–70
taxes, 329, 351
on earned income, 350–51
financial transaction, 226
on investment income, 350–51
leverage and, 349–50
taxpayers, 278, 293, 300, 316, 323
losses absorbed by, 184, 190, 340, 358
protection for, 197, 217–18, 229
tax reform, 353
Taylor, Diana, 13, 174, 365n
TD Bank Group, 357
Tea Party, 231
Temporary Liquidity Guarantee Program (TLGP), 118, 127, 158, 169–70, 176–77, 202
Thain, John, 3, 5
Thatcher, Margaret, 302, 309
13 Bankers (Johnson), 327
Thomas, John, 113
Thompson, Ken, 95
Thompson, Sandra, 87–88, 170–71, 286–87
3/27s, 44–45, 56, 67, 136
thrift holding companies, 117–18
thrifts, 210
capital requirements for, 40
failed, 57, 75–76, 279
insured, 53
mortgages and, 52
NTM loans made by, 43–44, 47–48
NTM regulation and, 42
sick, 89
Time, 8, 305, 309
Too Big to Fail (film), 319
Too Big to Fail (Sorkin), 100, 301, 319
too-big-to-fail (TBTF) institutions, 5, 43, 94, 189, 190, 196, 215, 218–19, 229, 307, 312, 348, 358, 385n
Citi as, 167
internationally, 260
moral hazard and, 28
small businesses and, 109, 112
TPG Capital, 77–78, 91
trading partners, unsecured, 241
tranches, 51, 54, 61–63, 135, 234
Treasury bonds, U.S., 352
Treasury Department, U.S., 1, 16, 19, 67, 74, 82, 141, 179, 182, 187, 240, 247, 249, 278, 280, 318, 342, 358, 363, 381n, 386n
on bad mortgages, 128
Bair at, 12–15, 23, 49, 50–51, 285, 346
on Basel II implementation, 37
on Basel III, 258–59, 270
BofA and, 127–28, 204
borrowing by, 351–52
Capital Assistance Program, 158–59
CDFI-centered TARP of, 285–86, 287, 289
Citi and, 125, 126, 168, 169–70, 206, 359
FDIC’s borrowing from, 110, 177, 217–18, 294, 300
Financial Stability Plan of, 155–64
free-market economists at, 134, 135, 139, 147
FSOC and, 338
Geithner as new head of, 124, 142–44, 363–64
inspector general of, 369n
Lehman Brothers failure and, 107
loan interest subsidy program at, 136, 148–49, 151–53
on mortgage loan modification, 131–32, 134–37, 139
on mortgage loan servicers, 244
proposed regulatory legislation and, 182–99, 214–18, 221–22, 229, 240
resolution proposals of, 183–84
securities PPIP of, 161–64
short-termism at, 352–53
stress tests and, 156–59
stronger lending standards recommended by, 50
subprime lending and, 49, 67–71
TARP investme
nts by, see Troubled Asset Relief Program
unlimited guarantees program and, 108–13, 115–20, 201–2
on Wachovia situation, 100–101, 103
on WaMu situation, 86, 89, 93
white paper of, 187–91, 193, 224
Trichet, Jean-Claude, 261, 268, 271–72
triple-A ratings, 52, 55, 61–63, 70, 149
Troubled Asset Relief Program (TARP), 92–93, 99, 109, 111–13, 118, 137, 152, 155–56, 178, 179, 191, 340, 357, 369n
Capital Assistance Program and, 156, 158
for CDFIs, 285–87, 289
Citi and, 121, 125, 126, 167–68, 201–3, 205–8
funding for, 216–17, 335
large banks as principle beneficiaries of, 4–5, 6, 115–16, 131–32, 134, 141, 153
repayments of, 201–8, 358–59
special inspector general for (SIGTARP), 207
taxpayer anger at, 118
UCB and, 280
Turner, Adair, 263, 269
23A, 176
2/28s, 44–45, 56, 67, 70, 136
UBS, 271
Ugoletti, Mario, 51
unemployment, 157, 359
unemployment benefits, 353
uninsured accounts, money markets as, 108
uninsured deposits, 81, 85, 90, 92, 100, 108–9
foreign, 98, 121, 123, 168, 169, 173, 226
large, 238–39
United Commercial Bank (UCB), 280–81
United Kingdom, 225, 260, 262–64, 269, 330
Barclay’s Libor scandal and, 361–62
debt guarantee program in, 117
Financial Services Authority (FSA) of, 192
Northern Rock crisis in, 110, 274
unsecured creditors, 85, 331
unsecured debt instruments, 91
Urban Partnership Bank, 290
USA Today, 108
U.S. Bancorp, 171, 173, 286, 287, 331
Utah, 25
variable-rate financing, 209
Vekshin, Alison, 163
venture capital firms, new banks chartered by, 278
Villarreal, Jesse, 15, 68, 80, 109, 111, 113, 298, 316
Virgina, 311
Vogue, 306–7
Volcker, Paul, 141, 205, 222
Volcker Rule, 222–23, 227, 229
Voting Rights Act, 309
Wachovia Bank, 1–2, 79, 95–105, 107, 143, 166, 192, 233, 301, 339
Citi’s bid for, 96–105, 124
as complex institution, 100
Golden West acquired by, 76, 84, 95
“ring fence” proposal for troubled assets of, 96
systemic risk exception for, 99, 103
Wells Fargo’s acquisition of, 96–105, 124, 143, 355
Wall Street, 68, 129, 141, 143, 157, 162, 184, 218, 228, 301, 347, 350, 351, 361
hostility to restructuring on, 65–66, 69
see also investment banks
Wall Street Journal, 8, 14, 67, 92, 128, 144, 171, 221, 224–25, 251, 278, 288, 300–301, 304, 309, 325, 361
Walmart, bank charter application of, 14, 25–26
Walsh, John, 235–37, 239–40, 246, 248, 252, 254, 256, 258, 270, 271–72, 318, 339, 356
Walter, Stefan, 257–60, 262–63, 266, 269–70
WaMu Inc. (WMI), 92, 195