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Former FDIC Chairman Sheila Bair discusses her new book on the collapse of Wall Street and the effects Americans are still feeling today.
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On Wall Street from itself.
Sheila Bair doing your book I mean you really -- always come across as a person you're not up much of a political act yet it seems like you have.
A much more independent view of how things should be are you concerned that there are too many political motivations.
With the people in Washington.
Well I do think that the the whole town actually become too heavily influenced by financial intrinsic specially large financial interest says some of -- political money campaign contributions some of it is the promise of jobs are consulting contracts or whatever.
A lot of -- -- intimidation these institutions are so large -- their complex nation so hard to understand and they can minutes ago or systemic you don't do this you know it is going to be cataclysmic results.
And it's not that there will are always the expertise to push -- question.
All right -- McDonald's a -- is on this program of the past former Lehman vice president and he was trying to say it nicely right.
But what he said was that the regulators.
Time.
Hard don't understand right there -- -- above bunch of lawyers -- -- Smart people Yahoo! but they have no experience in in the business of Wall Street so therefore basically they can they can be buffoon pretty quickly they can have the wool pulled.
There will die if I think there's -- -- -- to -- a lot and I think there is and I think they understand lending this is one of the reasons why I think if you providing insured deposits to bank.
That should support lending.
And because examiners understand that investors understand that you can you can get in trouble with loans but this is -- their understandable -- He's -- that -- complex securities books.
I've I'm not sure that's -- situation I would I don't want those kind of an insured deposits among those funded by the private sector yet given the bond markets.
Commits the market and these are safe ethics and best because I do think that there's a lot.
Beyond the the -- capacity of government regulators to understand a monitor on top absolutely.
You in your book you go after Larry Summers -- go after Tim Geithner listless start with Tim Geithner as Treasury Secretary he.
I think it sounds like your concern was was that he was buddy buddy with all the New York based as he -- the New York fed.
And their forehead their interest at hand one heart and all the other -- put together.
Why do think there -- Various central focus on making sure these guys stood up -- stay profitable and that the to cure them somehow that would that would help the country.
And it's like fuel that you know it's good for GM is good for the US say what's good for Citi is -- for the USA.
And I think it was sincere I think people were were were doing what they thought was right but it's just it's not the same it's not this and we know that now.
You know on this this -- about all the bailouts are cake -- they've made money -- -- -- we succeeds in making the banks profitable again by making you know giving them a lot of that government support.
Now they're giving a bit of the spectrum responsive to good about that I don't feel good about that I feel terrible about it -- of the financial crisis the -- -- the homes are lost.
That deficit problem I have I mean the moral hazard that was created the public's cynicism over the over the convert.
You a few words you were there are you were at that meeting with all the big bank CEOs -- I was that was moral hazard even discuss.
Well.
Not really I mean I think we've that we raised it only -- begin in 2009.
But.
At least in 2008 we were dealing with a very uncertain situation things were potentially spinning out of control we didn't have good information so I can understand why the instinct was to throw a lot of money addict.
In 2008 and it was easier to write big checks institutions and try to get the loans restructured.
But banks so even and we were too generous -- going to 2009.
The system was staple that was when we should've imposed accountability some pain.
The place -- replaced managers made them so -- bad assets take losses.
And I really didn't.
Are you in favor of trying to put Humpty Dumpty back together again and I take that Glass-Steagall and -- and that's it again.
Well I have nice to that's realistic but I would like to see a very big -- of separation because that the other problem.
Washington insist.
To capture the very large financial institutions he stays that -- if you were if you -- queen of the working right yeah okay would you redo would you redo blasting I would day I would I think the regulators have the tools now under Dodd-Frank to require separation between what you had fun with insured deposits.
And other activities it was should be outside of -- -- they do have that authority now I think that the regulators that they have the will could get -- -- -- fire walls.
When they're they're going to do that I don't know but I hope -- that's on the recommendations and.
