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Farewell, Sheila Bair
By BEN PROTESS

Wall Street has a reason to celebrate: Today is Sheila Bair’s last day as a regulator.

Over her five-year tenure as chairwoman of the Federal Deposit Insurance Corporation, Ms. Bair emerged as a fierce banking industry watchdog. Her reign spanned some of the industry’s darkest days — the subprime mortgage crisis, the near collapse of Wall Street and several hundred bank failures that depleted the agency’s deposit insurance fund. In the wake of the crisis, Ms. Bair became an unapologetic advocate of financial regulation.

Along the way, her hard-edged tactics have won her few fans on Wall Street, though she has become a darling of Republican and Democratic lawmakers alike. Now she is joining the Pew Center, a nonprofit public policy organization, as a senior adviser. Ms. Bair, according to a Pew news release, will provide “advice and counsel on the ways that federal, state and local governments can best ensure fiscal and economic stability and family financial security.”

DealBook has taken a look back at some of the best — or at least most entertaining – moments in her Washington career.

Cassandra Comes to Washington

As a Treasury Department official in 2002, Ms. Bair was one of the first regulators to sound the alarms that the subprime mortgage market was, to say the least, a little risky. When she became F.D.I.C. chairwoman in 2006, Ms. Bair said she “started hearing that lending standards had deteriorated in subprime. So we started looking into it.”

Poor, Vikram

Ms. Bair can be tough. Just ask Vikram Pandit.

At the height of the financial crisis, Ms. Bair approved a deal for Citigroup to buy Wachovia with some help from taxpayers. But then Wells Fargo stepped in with a better offer. Ms. Bair reversed course, calling Mr. Pandit, Citi’s C.E.O., in the middle of the night to deliver the bad news.

Mr. Pandit protested, according to accounts in “Too Big to Fail,” saying the deal was bad for the country. “Well, I can’t get in the way of this,” she reportedly said.

Help for Homeowners

That was not her only run-in with Citi. During negotiations about a bailout of the Wall Street giant, she said the F.D.I.C. would approve a rescue plan only if Citigroup was compelled to participate in a foreclosure prevention program. Other regulators criticized her demands. But Ms. Bair, a Republican with a progressive streak, got her way.

“There are some people in the Republican Party who resent the idea of helping others,” she told The New York Times shortly after the deal was hammered out. “But the market is broken right now, and unless we intervene, these people and the economy won’t be helped.”

One of the Guys

Chip Somodevilla/Getty ImagesMs. Bair’s role in the bailout negotiations irked some regulatory colleagues, including Treasury Secretary Henry Paulson and Timothy Geithner, then the head of the New York Federal Reserve.

A New York Times story from late 2008 captured the tiff.

White House and Treasury officials argue that Mrs. Bair’s high-profile campaigning is meant to promote herself while making them look heartless. As a result, they have begun excluding Mrs. Bair from some discussions, though she remains active in conversations where the F.D.I.C.’s support is needed, like the Citigroup rescue. A Treasury official involved in the discussions said that while Mrs. Bair was seen as a valuable part of the team, there was a sense of distrust and a concern that she always seemed to be pushing her own agenda.

Watch Out, WaMu

Where prosecutors have hesitated, the F.D.I.C. has pounced. The agency has sued former executives of big banks that failed during the crisis, including a case filed this week against the former chief executive of IndyMac. In March, the F.D.I.C. sued the former top executives of Washington Mutual – and their wives.

Parting Shots

Ms. Bair has led the push for new financial regulation. At her final F.D.I.C. board meeting this week, she signed off on a plan to clawback lavish executive bonuses when a bank fails.

In response to complaints from lobbyists and lawmakers that the rules are too tough, Ms. Bair offered some final words of wisdom: “I see a lot of amnesia setting in now.”

http://dealbook.nytimes.com/2011/07/08/farewell-sheila-bair/?pagemode=print