• 04 Dec 2008 at 3:41 PM

Bailout Nation Will Tolerate No Dissent

Message to diligent administrators concerned with the preservation of taxpayer dollars: Get in the way of the bailout juggernaut and you will make powerful enemies. Consider the plight of FDIC head Sheila Bair:

Geithner, president of the Federal Reserve Bank of New York, has argued Bair isn’t a team player and is too focused on protecting her agency rather than the financial system as a whole, according to two congressional officials and a person familiar with his thinking. Bair has battled with Geithner and fellow regulators over aid to Citigroup Inc. and other emergency actions, making her enemies in the Bush administration.

Of course, it’s rather difficult to out Bair and still look like the magnanimous administration you’ve claimed to be (we’re looking at you Obama), particularly when she’s supposed to hold the post until 2011. Our popcorn machine is warmed up.
Geithner May Seek to Push Bair Out After Clashes During Crisis [Bloomberg]

35 comments (hidden to protect delicate sensibilities)
Show all comments ↓

Comments (35)

  1. Posted by guest | December 4, 2008 at 3:47 PM

    Does Bair have a better track record than Geithner?

  2. Posted by guest | December 4, 2008 at 3:49 PM

    God bless Bair. She is one of the last bastions of rationality in a world that no longer demand accountability.

  3. Posted by guest | December 4, 2008 at 3:51 PM

    Yeah I’m not sure so sure why Bair is being viewed as the good guy here. Her loan mod program supposedly has a 50% re default rate, and has eviscerated RMBS values. Furthermore, her actions with WB and WM were very unhelpful with regards to fostering confidence about lending to banks.

  4. Posted by guest | December 4, 2008 at 3:52 PM

    @3- Very good point. Her stances are very populist. Its almost as if she is trying to run for office.

  5. Posted by diablo | December 4, 2008 at 3:58 PM

    Bair saw this crisis from the beginning. As assistant secretary of the treasury she tried to put some control in the wave of predatory lending that was emerging in 2001. She was ignored, especially by her bosses and Greenspan.
    Bottom line, she has earned the admiration of Democrats in Congress. It will be hard to push her out without causing some trouble for Geithner’s nomination. I do think this story has been planted by Republican congressional staff and somebody at Citi.
    And @3, where did you get those “stats” since I’d love to review your source.

  6. Posted by Clown Capital | December 4, 2008 at 4:00 PM

    Wow Geithner. Let the ink dry on the nomination first before you try to push someone out. I’m already becoming a bit incredulous about this guy…

  7. Posted by guest | December 4, 2008 at 4:06 PM

    Diablo, #3 here, no need to be an asshole. The 50% re default stat is floating around the internet and comes from this CNBC report (http://www.cnbc.com/id/15840232?video=937488007). Who knows how accurate it is.

  8. Posted by guest | December 4, 2008 at 4:24 PM

    We are witnessing the greatest coup ever to occur only instead of being for the throne it is for control of the world financial system.
    All who resist must be destroyed. The US Treasury and Federal Reserve will be used, abused, and thrown out as trash before it is over.

  9. Posted by guest | December 4, 2008 at 4:28 PM

    Too long; didn’t read.

  10. Posted by diablo | December 4, 2008 at 4:30 PM

    @7
    The source is vague. It doesn’t say how the loan modifications were originated (no mention of FDIC or Bair).
    But a general point about mods:
    The problem always was that the principal part of the loan was too high, and no loan mod other than a cram-down can fix that. Have there been no cram-downs yet in residential?

  11. Posted by guest | December 4, 2008 at 4:35 PM

    10 That’s a strong statement. You sound like you know yr stuff diablo, but is there really no mod that can fix the problem? People after all were able to carry when they were in the teaser rate phase of their loans.

  12. Posted by guest | December 4, 2008 at 4:36 PM

    Submit to the will of The Messiah. We all must submit to the will of The Messiah if we are ever to see prosperity again.

  13. Posted by guest | December 4, 2008 at 4:38 PM

    Diablo – I think Durbin has reintroduced a cram down bill in the Senate, not sure if its going to be tacked onto the Detroit bail out. Agree completely that the real issue is that principal is too high. Not sure if lower interest rates can really help.

  14. Posted by guest | December 4, 2008 at 4:41 PM

    3 clearly hasn’t thought rationally about what they just said.
    Let’s be honest: really?
    I’m not sure what this ladies comments (or even actions) have to do with borrowers sheer inability to repay obligations.
    The loan mod programs I’m aware of were very generous but keep in mind 1) if you lied on your NINJA loan app, you’re probably not going to try to go in for a loan mod where you actually have to verify info, and 2) I would think the people who do go in for these things are so far behind anyway, it’s just a ‘wtf hail mary’ as the mod programs are not hand outs.
    If you want me to also expose the stupidity of your “fostering confidence about lending to banks” statement I’d be happy to oblige.

  15. Posted by guest | December 4, 2008 at 4:42 PM

    all we like sheep have gone astray.

  16. Posted by guest | December 4, 2008 at 4:46 PM

    Bair isn’t going anywhere. Obama would be an idiot to oust someone who is perceived to be more concerned about helping “main street”…
    And who gives a fuck if she wouldn’t help Citi – because Timaaay wanted to bend over a table for Viki Sheila should have been onboard?
    Maybe once Timaay realizes Treasury is tax dollars and not printing money like the Fed he’ll smarten up.

  17. Posted by guest | December 4, 2008 at 4:46 PM

    Bair isn’t going anywhere. Obama would be an idiot to oust someone who is perceived to be more concerned about helping “main street”…
    And who gives a fuck if she wouldn’t help Citi – because Timaaay wanted to bend over a table for Viki Sheila should have been onboard?
    Maybe once Timaay realizes Treasury is tax dollars and not printing money like the Fed he’ll smarten up.

  18. Posted by guest | December 4, 2008 at 4:47 PM

    Submit to the will of The Messiah. We all must submit to the will of The Messiah if we are ever to see prosperity again.

  19. Posted by guest | December 4, 2008 at 4:52 PM

    14- Yep I’m an idiot. Educate me. Explain to me how taking out WM and WB and leaving unsecured bondholders with less than cents on the dollar during the biggest systemic risk meltdown in our lifetimes didn’t aggravate the problem? Now the FDIC is guaranteeing bank debt because no one wanted to buy bank bonds.

  20. Posted by guest | December 4, 2008 at 5:09 PM

    I really hate the word juggernaut

  21. Posted by guest | December 4, 2008 at 5:12 PM

    Larry Summers making noise already

  22. Posted by guest | December 4, 2008 at 5:13 PM

    @20
    Not 14
    No one is buying bank debt because it is junk and not worth anything. Look at the LEH liquidation. She made a decision that saved taxpayers significant money.
    No bank is very different than any other. Some are only slightly better than others.

  23. Posted by guest | December 4, 2008 at 5:24 PM

    i’m new here but loving it… quick question, who the #$%^& is Wideclops?

  24. Posted by guest | December 4, 2008 at 5:37 PM

    @24 your mom

  25. Posted by guest | December 4, 2008 at 5:45 PM

    @25 – very clever, are you the Kevin the intern charachter?

  26. Posted by guest | December 4, 2008 at 5:47 PM

    Wideclops could be your mom. Never know these days.

  27. Posted by guest | December 4, 2008 at 5:48 PM

    I don’t quite know what to make of Bair. Didn’t she play a pivotal role in arranging the Washington Mutual deal so that it would be set up just right to welcome the conquering hero Jamie Dimon and his minions at JPM?
    And I’m not so keen on Geithner in the first place. Some journalist said that he had not made any blunders … yet. Well, the question that has to be asked is was the forced selling of Bear a blunder? The shoring up of AIG? A blunder or just an always-present headache? The decision to let Lehman fall: blunder or daring risk that turned into a blunder? And on and on … Mr. Geithner has had his hand deep in the ongoing surgery performed on the U.S. financial system. Paulson leads, Gaithner follows. Mr. Paulson is a political appointee whose term ends with the Administration. Mr. Geithner is supposed to be a high-ranking apolitical officer of an independent entity, the Federal Reserve. In the long run, has his activism really served the fed that well?

  28. Posted by guest | December 4, 2008 at 5:48 PM
  29. Posted by guest | December 4, 2008 at 6:02 PM

    Check this out:
    “New York Federal Reserve Opens ‘Pawn Shop’ to Buy Up ABS Junk”
    “On Wednesday, December 3, 2008 The New York Federal Reserve website reported that they will begin to purchase Asset Backed Securities (ABS) from failed mortgage giants Fannie Mae and Freddie Mac, as well as the Federal Home Loan Banks. They also hinted that they will stop there – everything seems to be on the table now, officially. Treasuries and stocks may see direct effects, with outcomes mixed. Initially, the program will concentrate on non-callable, fixed-rate senior benchmark securities such as Mortgage Backed Securities (MBS), but there are indications in the language used that the program may expand to include other ABS such as privately issued MBS (non-GSE), bonds, stocks and other equities. With this much unprecedented Government intervention in the markets, I find it difficult to apply any models effectively in a predictive fashion. In the long run, I believe will be inflation and devaluation of the dollar – combined with the aftermath of record writedowns, mergers, buyouts, and outright failures that we will see in 2009 – that will be the legacy of these efforts.”
    http://yourmortgageoryourlife.wordpress.com/2008/12/04/new-york-federal-reserve-opens-pawn-shop-to-buy-up-abs-junk/

  30. Posted by guest | December 4, 2008 at 6:48 PM

    #2 said – “She is one of the last bastions of rationality in a world that no longer demand accountability.”
    !!!!!!!!!!
    http://www.washingtonpost.com/wp-dyn/content/article/2008/12/04/AR2008120402182.html
    “For lenders and companies servicing loans held by struggling borrowers, Bair said, “There is an obligation to modify, not to foreclose.”
    “Investors should be taking a hard look at what they’re advocating,” she said. The harder investors push, “the more there’s going to be backlash here.”
    Congress may step in and change the legal obligations of mortgage servicers toward investors, she suggested. ”
    Could that be classified as a ‘threat’?

  31. Posted by Harald | December 4, 2008 at 11:53 PM

    Bair has shown some fucking common sense so now she is being alienated by Bald/Beard. She pointed out that the US govt is missing an “exit strategy” and apparently they didn’t like that
    http://biz.yahoo.com/ap/081202/bailout_exit_strategy.html?.v=2

  32. Posted by guest | December 5, 2008 at 1:59 AM

    #32 Right because she obviously has one herself that isn’t some crafted socialist talking point to “empower the people.” She’s fighting a losing battle against the old guard.
    #4 gets it right.

  33. Posted by guest | December 6, 2008 at 9:37 AM

    #1 Bair versus Geithner…Bair has not completely sold her soul to Wall Street and seems to have a genuine concern for folks on Main Street. She also did not oversee the build-up of the biggest bubble in imagination at the Wall Street banks as Greenspan’s bu– boy. So that is in her favor.

  34. Posted by guest | December 6, 2008 at 9:38 AM

    #1 Bair versus Geithner…Bair has not completely sold her soul to Wall Street and seems to have a genuine concern for folks on Main Street. She also did not oversee the build-up of the biggest bubble in imagination at the Wall Street banks as Greenspan’s bu– boy. So that is in her favor.

  35. Posted by guest | December 8, 2008 at 11:37 AM