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“Bull by the Horns” author Sheila Bair on why the government needs a more standardized process to deal with failed institutions.
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And CEO Jamie Dimon turns the tables thing goes on the offense today Washington DCB council on foreign relations.
-- said his company lost up to ten billion dollars as a result of the government.
Asking him to private teetering Wall Street firm Bear Stearns during the financial crisis take a lesson.
When you wanna come after -- down the ropes in the Bear Stearns did that shape -- was asked to do by the federal government.
And we've been very other shows that the -- about about the economic potential effects of airfare on the -- what kind of five to ten billion dollars on various things would be different now.
And yes I put -- -- -- category.
Take on the big board.
-- -- We me -- -- Sheila -- former chairman of the FDIC injured during the financial meltdown and author of the new book bull by the horns.
Thank you so much for joining me tonight and and what about that he -- he put -- -- -- unfair category.
Writes well I think he has -- point I think this is a -- and it yet again another legacy of the bail out says this was done in the spring of 2008.
According to published reports the New York fed reach out to them asked them to acquire -- terms with assistance was provided.
By the New York bad I don't know what the terms of that transaction were but apparently didn't address the issue of whether JPMorgan Chase was also buying.
All all liabilities including the fraud potential fraud claims that had -- -- to Bear Stearns so.
It's another reason why you really need to standardize process to deal with the -- institutions if you put -- bankruptcy.
We're -- put him into the FDIC process which is really essentially a bankruptcy process.
Generally when.
Other Kennedy's bid on these -- institutions.
They don't acquire the fraud and fraud stays in the receivership that is bankruptcy or the FDI what it -- time -- that in this instance started out as well yeah I don't we we're we we're not a crisis in the spring of 2008 when this when this that transaction was -- range so again I don't know why -- -- -- -- -- -- And you know I want me even a crisis starting this is part of what not a -- ball rolling you know things are well well I figured there are disagreements about that I have never seen a convincing analysis of the Bear Stearns -- -- was necessary and I think the New York fed needs to do a better job of explaining why it in the spring of 2008.
When this system is not that unstable yet.
That said they had it is assisted transaction but he's right they did they reached out to him they asked him to do it.
And I don't how the documents were who were drafted and apparently they did not protect.
JPMorgan Chase -- from -- potential liability for fraud committed by Bear Stearns.
If you had a bankruptcy process our process the -- at the acquirer does not take these fraud liabilities that I it doesn't sound that was done.
Here so I think this unfortunate but it just it underscores a reason why we don't -- duties in -- bailouts and ignore we we need to standardize process.
People know what they're doing what they're taking what they're not taking do you think it's wrong very competitive in New York attorney general be going after JPMorgan now I don't you know he he he -- you force is a law -- if if -- Bear Stearns committed to have pride that needs you know bid.
-- -- he pursues added whoever currently owns Bear Stearns is going to be on the other end of that enforcement action.
I have said generally.
That I I do wish enforcement.
Would put more -- focus on suing individuals.
And posting personal accountability going after personal assets and putting people in jail where appropriate I know those cases are harder to prove.
But I think from the standpoint of discouraging -- future risk taking and punishing this behavior and trying to make sure doesn't happen again.
If you -- personal accountability.
In get a lot more -- reinforcement but you know particular taken action against the corporation the corporation is gonna pay for individual -- You -- to Lou Dobbs that you think that the slow growth that's going on right now in economies because we propped up banks instead of really actually fixing the financial system that's yeah what do you mean by that.
Well I think in 2009 we we did have a stable financial system and that we could have very sick institutions like Citi should have been restructured all banks have been required to shed their bad assets clean up their balance sheets.
That would have been that put them in a better position us to -- into the real economy.
You know banks that have a lot of bad assets on their books they don't do a lot of new lending what they do is -- sit around and -- balance sheet because they've got all this toxic.
All these toxic legacy of legacy assets that they have to worry about dealing with over time -- Getting banks to clean up their balance sheet and and restructuring -- disclosing the really sick ones is really in my view a much better approach I think historically this has been proven.
That when you go ahead take your losses early.
Downsize the sector clean about isn't a better position to lend into the real economy showed prosthetics and particularly go without asking you to react -- cyber attacks that we're seeing on the banks right now I mean -- somebody who -- -- chairwoman of the FDIC do you think it's something we should be very concerned about.
Well I do I think and again -- in his future remember that there are other issues besides of the financial crisis is important as those are and I really wish we can get these reform -- -- 'cause -- worry that the way Dodd-Frank has been dragging on.
That is to regulators is getting those rules on other issues don't get the attention they need to receive and this is clearly something that's very important to the stability of our system and to consumers in India.
Integrity of their financial information and and the protection of their -- Their bank accounts so.
I I hope I think this is very troubling news reports and I hope bank managers should be Leary and focus on this.
And bank regulators should be very focused on this is a very near term are risks that.
That people need to really to be very focused shield the -- is tremendous and I wish we had worked really helped get him back on the show.
I'm happy to thanks very.
