Sheila Bair: Dodd-Frank really did end taxpayer bailouts
By Mike Konczal, Published: May 18, 2013 at 10:27 amSheila Bair, the hard-charging former director of the Federal Deposit Insurance Corporation, stands at the center of three of the biggest debates in Dodd-Frank implementation.
We talked about all three of these topics; our discussion is slightly edited for clarity.
Mike Konczal: To start, how do you think Dodd-Frank is unfolding? Specifically, the rules for Title II and “resolution authority.”
Sheila Bair: We finalized most of the rules we could write on our own before I left, though they are working on further clarifications. I think the FDIC has come up with a viable strategy for resolving a large complex financial institution. This is their strategy of using a single-point-of-entry. The FDIC will take control of a holding company and put creditors and shareholders into a receivership where they, not taxpayers, will absorb any losses. This will allow the subsidiaries to remain operational, avoiding systemic disruptions, as the overall entity is unwound over time.
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