Bull by the Horns: Fighting to Save Main Street from Wall Street and Wall Street from Itself.

Author:Sweeney, Paul
Position:Book review

By Sheila Bair

Free Press, 415 pages, $26.99

The Great Recession could have been averted with just one "bullet."

Sheila Bair made that startling declaration when she testified to the Financial Crisis Inquiry Commission while still chairman of the Federal Deposit Insurance Corp. (FDIC).

"I absolutely would have been over at the Fed writing rules," she said, "prescribing mortgage lending standards across the board for everybody, bank and nonbank, that you cannot make a mortgage unless you have documented income that the borrower can repay the loan."

Bair was never "over at the Fed." But the good news is that from June 2006 until July 2011, as head of the FDIC, she was a key economic player in government grappling with the tumultuous economic upheaval that followed the subprime mortgage debacle.

Now, in Bull by the Horns: Fighting to Save Main Street from Wall Street and Wall Street from Itself, Bair takes us inside the rough-and-tumble world of Washington decision-making and we learn for the first time about many fateful, life-or-death decisions concerning securities firms, thrifts and banks--including The Bear Stearns Cos. Inc., Lehman Brothers Holdings Inc., IndyMac Bank, Washington Mutual Bank and Wachovia--that fell like dominoes. We find how others like Citigroup were bailed out, and at what cost.

A lifelong Republican--Bair hails from Kansas and came to government service as a protege of home-state Sen. Bob Dole--she was named FDIC head by former President George W. Bush. Yet she forged ties with congressional Democrats like Barney Frank (D-Mass.), and frequently advocated policies more closely identified with President Barack Obama than members of his own team.

Not only was she usually the only woman in the room, Bair was often the only regulator willing to protect depositors, homeowners and taxpayers against powerful establishment figures who championed bailing out the financial services industry's managements, investors and bondholders.

Commencing with Bear Stearns--"a relatively small investment bank, a perimeter player at best"--regulators showed a willingness to put taxpayer money at risk to save Wall Street firms.

She was incredulous. "The FDIC was the only agency that had the authority to resolve failing financial institutions, and that...

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