Bair rejects McConnell talking points

BAIR REJECTS MCCONNELL TALKING POINTS…. Finding a credible figure who agrees with Senate Republican talking points on Wall Street reform is proving to be very difficult. Senate Minority Leader Mitch McConnell (R-Ky.) is not only lying, he’s doing so in such a way as to make it obvious.

Consider FDIC Chair Sheila Bair’s comments to American Banker yesterday:

Would this bill perpetuate bailouts?

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.

Asked specifically if reform will end the “too big to fail” phenemenon, Bair told the truth: “I think it will go a long way.”

And who’s Sheila Bair? She’s not exactly a liberal activist — she’s a Bush/Cheney appointee to the FDIC, a former assistant Treasury secretary in the Bush administration, and a former aide to Bob Dole.

I know the political world likes to put on airs, and pretend that it’s impolite to expose a high-ranking official as a dishonest hack. But this week, no one wants to defend Mitch McConnell’s abject nonsense.

Support Nonprofit Journalism

If you enjoyed this article, consider making a donation to help us produce more like it. The Washington Monthly was founded in 1969 to tell the stories of how government really works—and how to make it work better. Fifty years later, the need for incisive analysis and new, progressive policy ideas is clearer than ever. As a nonprofit, we rely on support from readers like you.

Yes, I’ll make a donation