Sheila Bair

A life insurance policy is not indentured servitude.

  • 2014 0310 - Letter - Sheila C. Bair to Senator Sherrod Brown (D-OH) - 6p
    • Senate Committee on Banking, Housing and Urban Affairs Subcommittee on Financial Institutions and Consumer Protection
    • Re: Subcommittee Hearing: “Finding the Right Capital Regulation for Insurers”
  • professor of Financial Regulatory Policy for the Isenberg School of Management at the University of Massachusetts-Amherst.
  • 2006-2011 - Chair of the FDIC, June 2006 to July 2011
    • appointed to the post for a five-year term on June 26, 2006 by George W. Bush through July 8, 2011
    • 2008 and 2009, Forbes magazine - second most powerful woman in the world.
    • 2009 - TIME magazine's,Time 100" most influential people; awarded the John F. Kennedy Profile in Courage Award; and received the Hubert H. Humphrey Civil Rights Award
  • 2013 - Book - Bull by the Horns: Fighting to Save Main Street from Wall Street and Wall Street from Itself, By: Sheila Bair

  • Question: ... How do you account for the fact that hundreds went to jail in the previous banking scandal in the '80s and no one has gone to jail here?

  • Sheila Bair: I don't know. I think it's a combination of things. I think the line between fraud and just cluelessness or looking the other way -- it's sometimes hard to figure out where to draw that line.

pbs.org/wgbh/pages/frontline/oral-history/financial-crisis/sheila-bair/

  • 2004 - AP - Consumer Ramifications of an Optional Federal Charter for Life Insurers, by Sheila Bair - 273p
    • Chart p262
  • ??? - 2009 0616 Insurance and Systemic Risk- Bair - Traditional Life insurance not a systemic risk
  • 2010 0114 - FCIC - Hearing - Statement of Sheila C. Bair, Chairman, Federal Deposit Insurance Corporation : On the Causes and Current State of the Financial Crisis before the Financial Crisis Inquiry Commission - [link-54p]
  • 2010 0407 - FDIC - Beyond Bankruptcy and Bailouts: The FDIC Resolution Process is the Right Model for Failing Firms, By Sheila Bair, Chairman of the FDIC - [link]
  • 2011 0709 - NYT - Sheila Bair’s Bank Shot, By Joe Nocera - [link]
    • ‘They should have let Bear Stearns fail,” Sheila Bair said.
  • 7. Costs and Benefits of Federal Regulation
    • The ACLI has long argued that a uniform system of regulation, be it state or federal, should yield substantial cost savings, a portion of which will inure to the benefit of insurance consumers.
    • The most comprehensive effort to quantify these benefits and their implications for insurance consumers was conducted in 2004 by Sheila Bair, who at the time was the Dean’s Professor of Financial Regulatory Policy at the University of Massachusetts’ Isenberg School of Management.
    • -- The full report - "Consumer Ramifications of an Optional Federal Charter for Life Insurers" - 273p 

2011 1213 - ACLI Letter (Hughes) to FIO (Federal Insurance Office) - regulations.gov/document/TREAS-DO-2011-0010-0001- xp

  • ...our research also suggests that the current multi-state system is structurally resistant to needed reforms, even in the face of broad consensus that greater uniformity and centralization is needed in the oversight of life insurance products. (p2)
  • The difficulty of life insurance policyholders to know about such changes before they actually make a claim – when it is too late -- argues just as easily for more rigorous, ongoing oversight. (p70)
  • Most federal officials gave the life insurance industry high marks for its lobbying prowess, particularly on tax matters.
    • Most also thought it would be helpful to hear from a “neutral” expert on insurance issues and that this kind of expertise could be provided through a federal insurance regulator.
  • Most pointed out that other financial bank and securities regulators do not “lobby” for their industries.
    • However, they do provide helpful expertise, as needed, from time to time. (p84)

2004 - AP - Consumer Ramifications of an Optional Federal Charter for Life Insurers, by Sheila Bair - 273p

  • Bank Atlantic vs. Richard X. Bove and Landenburg
    • int.nyt.com/data/int-shared/nytdocs/docs/476/476.pdf
    • (p199) - Deposition of Richard X. Bove
    • A. She [Sheila Bair] was saying that a couple of hundred banks would fail. I thought that was totally imprudent, totally incorrect, and should not have been said.
    • Q. Why was that imprudent and should not have been said?
    • A. Because these are people that are supposed to make sure that banks don't fail.
    • Q. Why is it that publicly saying that all of these banks are likely to fail, why would you consider that to be imprudent?
    • A. Because it creates fear.
    • Q. And what is the problem of creating fear?
    • A. That it causes the banking system to freeze up. It causes it causes a hording of cash, both within the financial system and outside of the financial system, and that hording of cash results in a negative impact on the economy.
    • Q. All right. Then you go on to say: are no benefits by having prominent officials claiming that large financial institutions are "There failing, are insolvent, are incapable of raising funds, or that they should be allowed to fail."
  • When IndyMac, a California bank, failed in the summer of 2008, it closed faster than the FDIC had projected, which Bair attributes to comments made about the bank’s position by Sen. Chuck Schumer (D-NY), which precipitated a bank run on uninsured deposits.

http://wbur.org/npr/653383884/2008-financial-crisis-fdic-sheila-bair

  •  
  • 2014 0310 - Letter - Sheila C. Bair to Sherrod Brown
    • Senate Committee on Banking, Housing and Urban Affairs Subcommittee on Financial Institutions and Consumer Protection
    • Re: Subcommittee Hearing: “Finding the Right Capital Regulation for Insurers”
    • Insurance companies are not risk-free
      • Though insurance companies are different than banks, it is important to remember that they put their money in many of the same assets: government and corporate bonds, mortgage-backed securities, and real estate loans.
      • Even if we concede these differences, insurance policy holders can “run,”  just differently.
      • A life insurance policy is not indentured servitude.
      • Policyholders can cash out whole life and annuity products, and halt premium payments on term products.
      • Indeed, one of the biggest life insurance failures – $15 billion Executive Life – suffered debilitating policy surrenders contributing to its failure in 1991.
  • Indeed, according to the American Council of Life Insurers’ data, life insurers have over a trillion dollars in real estate exposure, including $600 trillion in mortgage-backed securities and $354 billion in commercial and residential mortgages. <Typo? Trillion - Billion>  (p5)
  • I question the argument that insurance organizations should have weaker bank/thrift holding company protections because their insurance policy holders can’t easily cash out if they make bad investments. (p5)
  • Moreover, given the long-term nature of life insurers’ obligations to their policy holders, they are exposed to substantial risk based on market fluctuations and turns in the economic cycle. Thus, it could be easily argued that they need more, not less, capital than banks based on the long tail of their liability structure.  (p5)
  • The Collins Amendment/Section 171 was designed to strengthen the integrity of capital standards by imposing a generally applicable floor that would constrain destabilizing leverage for all systemic institutions, regardless of business model, so that they would have to hold at least as much capital as that generally required of smaller banks.  (p6)

2014 0310 - Letter - Sheila C. Bair to Sherrod Brown

  • Financial Crisis Inquiry Commission (FCIC) - Finding Aid - 2190p
    • 17609140-Sheila-Bair-Systemic-Rist-Testimony-072309[1]_1.pdf
    • 2008-10-23 Bair testimony before Senate Banking_1.pdf
    • 2009-10-13 Bair interview of CNNC_1.rtf
    • 2009-10-30 NTY Regulator Picks Apart Obama Plan_1.rtf
    • 2009-11-1 Post Moral Hazards No one has sure fix for too big to fail_1.rtf
    • 2009-11-13 PBS Bair inteview with Jim Lehrer_1.rtf
    • 2009-11-13 Post Banks to Prepay FDIC for Failures_1.rtf
    • 2009-11-16 Forbes Bair Market_1.rtf
    • 2009-11-18 Forum on Small Business Financing Issues_1.rtf
    • 2009-11-19 NYT Pathology of a Crisis_1.rtf
    • 2009-11-25 NYT As Bank Failures Rise Insurance Fund Falls Into the Red_1.rtf
    • 2009-12-14 Bair interview on CNBC_1.rtf
    • 2009-3-19 Bair testimony before Senate Banking_1.pdf
    • 2009-7-24 Bair testimony before House Financial Services Committee_1.pdf