The billions of taxpayer dollars spent to bailout big banks was largely unnecessary, according to Sheila Bair, former Federal Deposit Insurance Corp. chairwoman.
In an excerpt from her new book “Bull by the Horns: Fighting to Save Main Street From Wall Street and Wall Street From Itself,” which was published by Fortune, Bair writes “with the exception of Citi, the commercial banks’ capital levels seemed to be adequate.”
“Without government aid some of them might have had to forgo bonuses and take losses for several quarters, but still, it seemed to me that they were strong enough to bumble through,” she writes.
That the U.S. government showered Wall Street with cash during the financial crisis as people were losing their homes and jobs continues to be a hot button issue. Many Americans blame the banks for the crisis and argue that Washington could have and should have done more for the people and less for those who created the problem.
Bair seems to agree and this is not a new position for her.
Last October, the San Francisco Chronicle reported that Bair spoke at the National Asian American Coalition conference about her disappointment that so little appears to have been done for the millions of homeowners still in distress.
“I wish I could say things have gotten better, but I don’t see that they have. The loan programs are not doing what they need to. Part of the problem is a not very well-functioning mortgage services industry. The resources are not there. The training is not there. The commitment is not there,” the Chronicle quoted her as saying.
Consistent with that sentiment, Bair writes in the book, “We used up resources and political capital that could have been spent on other programs to help more Main Street Americans.”
She admits that there was a lot less information available when the bailout decision was made and that that uncertainty played a factor in how the situation was handled.
Still, she writes, “In retrospect the mammoth assistance to those big institutions seemed like overkill. I never saw a good analysis to back it up.”