Bush-Appointed FDIC Chair Says Wall Street Reform Will Make Bailouts "Impossible"
Standing up for the big banks and credit card CEOs, Republicans in Congress are lying about financial regulatory reform, claiming it will result in a "permanent bailout." However, Bush-appointed FDIC Chairman Sheila Bair told American Banker that the pending legislation would make bailouts "impossible," and if Congress doesn't act, "you are going to keep having bailouts."
From American Banker:
Would this bill perpetuate bailouts?
SHEILA BAIR: The status quo is bailouts. That's what we have now. If you don't do anything, you are going to keep having bailouts. Bankruptcy doesn't work - we saw that with Lehman Brothers.
But does this bill stop them from happening?
BAIR: It makes them impossible and it should. We worked really hard to squeeze bailout language out of this bill. The construct is you can't bail out an individual institution - you just can't do it.
In a true liquidity crisis, the FDIC and the Fed can provide systemwide support in terms of liquidity support - lending and debt guarantees - but even then, a default would trigger resolution or bankruptcy.
Read the whole interview HERE.