I respect Ms. Blair's opinions about the financial crisis.
Please ask her to evaluate Sen. Dodd's sweeping new financial reform proposal.
Also,
I would be very interested in the opinions of Brooksley Born, former chairperson of the CFTC, about Sen. Dodd's proposed legislation. (I watched "The Warning" on Frontline and it's content left me with the determination to understand more about "high" finance and globalization.)
Thanks

Do you believe that Market Comparison And Discounted Cash Flow Methods Are
Fatally Flawed?
The market comparison method determines the price using past sales data. Price or value depends on the future not the past. The only financial factors, which can be obtained from market comparison, are approximate time-invariable quantities, such as the rate of return. The price, which changes continually with changes of future expectation and is a time-variant quantity, should not be determined based on past sales data.

The discounted cash flow method determines a resale price or capitalization rate based on the market comparison method. As the price, the resale price or capitalization rate should not be determined by market comparison.

The price, or the capitalization rate, and all the resale prices to infinity in time must all be calculated based on the expected future cash flows. What can be calculated should not be determined by comparison to past prices, for the two prices will contradict each other.

Being an incorrect valuation system, the discounted cash flow method will have difficulty in determining the discount rate from past sales data. The problem is further aggravated by the requirement that discount rates should be different for cash flows from different sources or years.

In the absence of a correct solution of value, the market price has been almost always wrong, as evidenced by our chronicle financial crises, but it appears to oscillate around the correct price because of the "invisible" market force of supply and demand or "the invisible hand." Without the solution of value, the market price is formed by the competing forces of the invisible hand and market instabilities, such as over-valuation and under-valuation due to the Finite Spreadsheet Instability, which occurs when an investment is considered in a finite, not infinite, time frame where the change in price feeds back on itself causing the change to exaggerate. Thus, a correct valuation system should make the invisible hand visible and be able to estimate the rates of return for the real estate market with sufficient accuracy. July 18, 2009

The only time the market comparison method can be used is if the following two conditions are satisfied:
(1) the future expectation is unchanged and
(2) the past sales data are correct or have been correctly determined by a correct method of valuation.

Condition (1) is generally not satisfied, for change is the rule, not the exception. If Condition (2) can be satisfied, the correct method should be used at all times, not the market comparison method. If condition (2) cannot be satisfied, the market comparison method would just be a process of "the blind following the blind" until everyone falls off a cliff, as in a financial crisis.

There are three commonly used methods of Discounted Cash Flow: (1) Discounting with one constant discount rate for all cash flows to infinity in time, as used on page 34 of the book "Theory of Value" by Gerard Debreu, (2) Discounting with different discount rates for each and every year, and (3) Discounting cash flows and the cash from resale within a finite investment periods with one discount rate, as used by Discounted Cash Flow Method For Valuation by Argus Financial Software.

Method (1) is incorrect, because the discount rate should depend on the length of the investment. Method (2) is conceptually correct, but unusable for market comparison. The discount rate, similar to the rate of return, should be an approximate time-invariant. Having several discount rate for each and every year defeat the purpose of market comparison, with just one approximate discount rate. Method (3) is fatally flawed because the comparison of the resale price of the resale capitalization rate is as wrong as the market comparison method for the price.

The seemingly simple concept of discounted cash flow or present value is an abstraction and runs into an impossible situation when it is used to simulate reality. The reality, in contrast to abstractions, is unique and can always be followed.

The Infinite Spreadsheet follows reality and avoids abstractions by accounting the expected cash flows in a realistic fashion, as suggested by Benedict Spinoza, who was one of few a completely independent deep thinkers. The cash flows and the cash from resale are summed up and equated to an expression involving a averaged rate of return over the investment period. The resale price for determining the cash from resale are determined exactly the way the price is determined above. This formulation must extend to infinity in time in order to have the equal number of equations and unknowns, that is that to be deterministic. The methodology is fully disclosed in the patent "Quantitative Supply And Demand Model Based On Infinite Spreadsheet" (Pat. No. 6.078,901) by Post-Science Institute.

First, thanks to Ms. Bair for the exceptionally competent job that the FDIC does to protect depositors in the smaller banks during this crisis mess. The other question is of course about the big banks and the whole too big to fail question. I'm all for more vigorous regulation of the industry, and I wonder if some regulations can be structured to use market forces to accomplish the bank breakup. For example, require a larger amount of capital reserves for larger companies, so that if a company of size X has reserves of Y, then a company of size 2X must carry reserves of 2Y, or some other suitable multiplier. Would not the smaller companies be more profitable, so that there would be market forces for the large banks to break up. Then, even if there are large banks, they would have to have sufficient reserves to lessen systemic risk. And would not the result be more banks of a smaller size that can be handled by the existing FDIC? I have read Mr. Solman's blogs saying that the standard argument against smaller banks is that they could not compete with worldwide large banks, but are there not efforts elsewhere to deal with the size issue?

Steve Brosnan
Los Angeles CA

Thank you for your no nonsense approach to our current problems with financial regulation. Any lessening of the FDIC's regulatory power would be a mistake and, in my opinion, an attempt to silence you.
What can the average citizen do to press Congress to pass strong regulatory reform which includes effectively dealing with such things as "too big to fail" and complete transparency on derivatives trading?
Again, thank you for your integrity and courage.

I think that banks that are deemed "too big to fail" should have to pay extra fees into a fund similar to the FDIC, to better pay for the fallout when they do fail again.

If they don't want to pay, they can sell of assets and become "small enough to fail without costing everybody big time."

What do you think about some disincentive/insurance program?

Did The Fed Caused The Financial Crises Of 2000s?

In an irrational society, it is only logic to expect that the most powerful organization usually causes the greatest crisis. But, being the most powerful, the organization is also most effective in covering up its mistakes. The Federal Reserve is the most powerful financial organization in the world and has caused the financial crises of 2000s, but, being the most knowledgeable, at least, in practical economics, it has been able to cover up its tracks. The Fed has proven through the financial crises the irrationality of our society.
Briefly, the former Fed Chairman Alan Greenspan was wrong to affect the stock market in 2000 by shrinking the money supply from March to October, after he incorrectly thought the Internet infrastructure building as a bubble, and the crash of the explosive growth of the Internet started the ball rolling on the subsequent financial crises of the first decade of the second millennium. The late Milton Friedman has repeated warned against the Fed trying to influence the stock market. He also proposed "the replacement of the Federal Reserve Board with a computer."

Chairman Greenspan knew enough economics to replace the high-tech Internet industry with the low-tech housing and automobile industries by lowing the fed rate to as low as 1%. The Internet had caused the boom in the late 1990s, in spite the claims of the credit by the politicians. Nature has given mankind roughly one major innovation per generation, around 25 years. With the erroneous perception of the Internet Bubble, claimed by the most powerful financial figure in the world, the world is left with an innovation vacuum for the subsequent years and beyond. The unusually long period of abnormally low interest rate had caused a real estate and automobile oversupply.

Without knowing the relationship between the interest rate and the price of mortgaged real estates, and automobiles, the Fed caused the Subprime Woe by raising the fed rate, continued even after Chairman Greenspan left office, up to 5.25%. From the Infinite Spreadsheet Valuation System based on the solution of value of Post-Science Institute relating the price to the interest rate and the rate of return, every percentage increase in the mortgage rate translates into about 9% of price drop. The increase of the fed rate from 1% to 5.25% caused mortgage rate to increase proportionally and roughly a 40% decrease in real estate price.

Karl Marx warned that the capitalistic system will collapse due to cutthroat price competition. But, the recent economic history has proven him wrong with continual parade of major innovations, which raises the price along with value and productivity. With the Internet, the major innovation for the current generation, being discouraged by Greenspan, the world economy continue to shrink due to price competition of non-innovative products. The proposal of Friedman of dropping money from helicopters has been implemented and proven effective by the current Fed Chairman Ben Bernanke, but could only be an temporary measure.

In conclusion, society needs to move from the Free Market of Milton Friedman to the post-Freidman economy regulated by non-violable laws of nature, such as the post-science solution of value, not to go back to pre-Friedman economy based on man-made regulations. The solution of value, which rigorously determines the relationships among the price, the interest rate, and the rate of return, can help the Fed to rationally set the interest rate, which should be greater than the inflation rate and less than the rate of return. The solution of value had easily predicted the over-valuation of the real estate market for the Saving and Loan Crisis and the Subprime Woe. The rate of return, which can only be determined with the availability of the solution of value, should be used to determine the funding priorities to stimulate the economy. Currently, the government with the approval or the Fed is funding easy and low-return projects similar to those which sustained the Great Depression. It is the strong speculation of Post-Science Institute that we might need to revitalize the Internet industry to avoid another Great Depression, for major innovation is difficult to develop within a short time and the Internet is a proven innovation. In sum, we should trust great minds, like Freidman and Marx, not those of Greenspan and other politicians, and we need to wind back the clock to 1990s before Alan Greenspan absent-mindedly crashed the Internet boom.

Deregulation of the financial industry has been four times now, inside 20 years, a full-blown disaster, ...an industry which functioned smoothly for 50 plus years under the previous highly regulated dispensation. Much of what has been going on since has been in any reasonable estimation fraud and conspiracy (the relevant politician enablers) to defraud. Allowing, for example, the "shadow-banking" system to overlap the publicly traded, was simply opening the vault to the thieves; and their CEO's one and all have since been on a frenzied looting spree unmatched in all history.

Why not re-regulate full bore? Separate all the functions again, and completely bracket off the casino function?

Looking at legislation now before Congress, together with the no-show Pecora-like commission, the resurgence of aggressive "Wall Street" lobbyists and deepening worries on "Main Street," would Americans be justified in fearing that we're blowing this window of opportunity and circling back round to last fall's economic cliffs?

And, if we so soon find ourselves right back there, will the federal government have the resources, and support of Americans, to again save our financial system?

With respect,
Jill Center
San Francisco, CA

1)Will supervision be less impartial under Dodd's plan than under the administration's or Frank's? (Political influence)
2)Dodd's plan seems to entail a loss of institutional knowledge and supervisory experience. Will it?
3) The UK and other countries want to increase the role of their central banks in supervision. Why isn't the US?

Now that Goldman Sachs and Morgan Stanley are bank holding companies, how do you propose to prevent them from exploiting the deposit insurance subsidy?

Moreover, do you think that these two investment banks should be allowed to use bank subsidiaries to fund their investment banking activities?

Finally, why were these two companies allowed to convert into BHCs without public comment or debate?

What does she think of Bernie Sanders's bill, the Too Big to Fail, Too Big to Exist Act of 2009?

When assets of failed banks go into resolution, does the FDIC ever consider the TIME to resell the assets in the public auctions in order to get a higher price for those assets, or does the FDIC just think "we are not in the business of managing these assets, so let's sell them ASAP"???

Obviously I am thinking if the FDIC sometimes waits to sell the assets in resolution so they can get a higher price, the taxpayer will get more of their money back.

Where do you feel Credit Default Swaps and other derivatives fit into a healthy, post-crash economy and how do you see the unwinding unfolding. If the five largest US banks hold/manage 98% of the $500T nominal US derivatives market, should the rules for them be different than for the other banks?

Where does the FDIC stand on the notion that there are a number of deposit taking institutions are too big to fail?

1. Are there any voices on the board to consider breaking up the 5 major banks, or is it unanimous to leave them alone? If unanimous, please explain why this is a good idea.

2. Do you think monetary policy within the last year has turned away from an asset bubble growing environment? If not, why hasn't it? If so, how?

1) Should the off balance sheet credit risks (from commitments not yet drawn, OTC derivatives, etc.), be accounted for in assessing FDIC premiums? If so, how?

2) What lessons, if any, can be drawn from the experience of the French and Spanish bank regulatory systems, which survived the crisis nearly unscathed (so far)?

Bankers are endowed by the state with most money creation. Should not that force them into a fiduciary role relative to the entire nation? Does not that creation of public money they are honored with, make bankers into officers of the state? Should not then be under oath, to respect the appropriate deontology?

Do you believe that it is important for any new regulation to be simple in concept (i.e. contrast Bernie Sanders' bill with Chris Dodd's bill in terms of potential benefits/shortfalls of each)

Many prominent economits from a broad range of horizons such as Nassim Taleb, Joseph Stiglitz and very recently Kenneth Rogoff (on Charlie Rose) have pointed to unfairness and economic un-effectiveness of the US Taxpayer bearing the brunt of the losses resulting from bad mortgage related assets held by banks. Bondholders have been artificially protected. Now that the financial collapse has been avoided, isn't it time to revisit this status quo?

They have proposed some form of compromise such as a debt-to-equity swap, which would reduce the systemic risk stemming from a leveraged economy and ease the strain on the taxpayer. At the bottom of the financial hierarchy, mortgage holders would be able to hold on to their homes in exchange for a stake in it by a third party.

Some academics at NYU have in fact worked out the technical and legal details:
http://whitepapers.stern.nyu.edu/summaries/ch16.html

Where do you stand on that issue and what are the powers of the FDIC to influence it?

How effective are banking industry lobbyist in shaping regulations? Have they been successful blocking initiatives that you support? If so please provide details.

1st: it would appear that a large part of the financial problem then and now is the lack of regulations on derivatives. What regulations would you like to see in that regard and how would you punish those who would abuse those regulations?
2nd: The Glass-Steagall Act was repealed in 1999. Elizabeth Warren wrote that the repeal of Glass-Steagall was one of the major causes of the global financial crisis of 2008-2009. Would you like to see Glass-Steagall reinstated, even strengthened?
Finally, if it were in your power, would you prosecute the heads of the major banks and investment houses along with all their top executives who could be proven to have participated in the downfall of our economic system, and if not, why not.

Subject: Viewer Questions to Bair and Answers from Post-Science Institute

On an attempt to make some REAL change, which can only come from knowledge, let me on behalf of Post-Science Institute, which holds the patent on the solution of value "Quantitative Supply And Demand Model Based On Infinite Spreadsheet" (Pat. No. 6.078,901), try boldly to answer and modify some of questions from your viewers from the point of view of the solution of value. I shall number my answers for clarify.

1. How to calculate insurance premium for deposits: Obviously, the most important question for FDIC is the How to Determine The Insurance Premium for bank deposits collected from banks. Dr. Hugh Ching, founder of post-science, had communicated with Dr. Milton Friedman in 1988, when they were working on the Chinese Economic Reform, and posted as a column in a student magazine that, I quote verbatim, "Technically, the main cause of the U.S. banking crisis involves the deregulation policy which permits banks to use deposits, which banks can get at very low interest rate (around 4 to 8%), to invest in high return and high risk business venture (around 40% to 100%). Since the deposits are insured by the U. S government, banks can get large amounts of funds at relatively low interest rate. The government has upset the market equilibrium by insuring the deposits at insurance rates too low to justify the risks under free market conditions."

Dr. Ching has publicly made official comments to the US Treasury recently objecting that insurance premium on Mortgage Backed Security (MBS) be calculated by "actuarial analyses." He suggested that the premium should be proportional to the equity = price - loan. Thus, FDIC, Fannie, and Freddie (and AIG) need to know how to determine the price, which I have commented briefly in one of my previous questions: "Do you believe that Market Comparison And Discounted Cash Flow Methods Are
Fatally Flawed?"

2. Financial Reform: The crisis happened because the price was wrong. Thus, finding the correct solution of valuation should be the main goal of the reform. Real estate appraisers, led by the top authorities in appraisal, such as Dr. Bill Kinnard, Dr. Hugh Ching, Mr. Tom Dum, and Mr. James Mason, tried and failed to reform the appraisal method during the Savings and Loan Crisis, which was solved politically with $150 billion taxpayer money. Because of its difficulty, the knowledge of valuation has be avoided by politicians and reporters, and even most economists, but not commercial real estate investors and professionals. NewsHour can make a decisive contribution to end our now chronicle financial crises, if it is bold enough. Thank you Paul.

3. To regulate or not to regulate: Post-Science Institute considers the solution of value, which is mathematically rigorous, an invariant non-violable law of nature. The solution simply says that an investor cannot simultaneously name the price and also the rate of return, for after naming one, generally the price, the other is automatically determined, by the solution of value. Please ask Bair (boldly) or any academician the revolutionary questions and make known to the world: Do you believe in the existence of non-violable laws of nature in economics, as laws of nature exists in science? Do you believe that man-made laws might come into conflict with these laws of nature? Post-Science Institute believes that society should move from the Free Market of Milton Friedman into a post-Friedman economy regulated by knowledge or laws of nature, not back to a pre-Friedman economy regulated by man-made laws.
4. Too Big Too Fail: Many people are brainwashed by the media that Too Big Too Fail is a cause of the crisis and want to see the size of the banks and insurance companies limited. As mentioned before, it is the lack of knowledge, particularly, the solution of valuation, which causes the banks to fail, but it is the government policies based on incorrect knowledge which allow some incompetent banks to grow too big too fail. Without government interference (controlled by political donations), four out of five business, regardless how old or how big, fail after 5 years because of competition in a free capitalistic market (or one out 100 survives after 15 years; all business eventually fail.)

Ask Felix Salmon's question:
Was the WaMu intervention a mistake, given the knock-on effects it had on the broader economy? Or, more generally, is there anything Bair would do differently, in hindsight?

Thomas Frank wrote a very sobering opinion piece this week on the real danger of having a super bank regulator. He points out the danger that a passionate deregulator could be appointed to the position of chairman of the super agency with disastrous results. Do you have an opinion on this?

Does President Obama have enough of a balance between independent advisors and industry insiders helping him understand how to best regulate TBTF institutions?

If Larry Summers is ignoring your comments in a meeting....do you ever just bring up Brooksley Born to him to help him refocus?

Ask Ms. Bair:
Why does the Prompt Corrective Action law apply only to small banks, and not mega banks?
If this is not the case, why does it sure look that way, and what evidence can you present to ensure Americans that you are indeed following that law?
Thanks.

A year later the stock market has almost doubled since the recession's trough in certain sectors such as financials. Why call attention to anachronistic problems such as deposit insurance now? Seems like it only hurts the markets every time I see you in the media pointing out deficiencies- nothing personal just an observation. Could you enlighten?

Dan
Syracuse, NY

Why aren't you following the Prompt Corrective Action law?

Would you please use your position to require that banks and FHA have higher down payment requirements and please dramatically increase the banks reserve requirements for any new loans with less than 20% down payments as quick as possible. I am amazed that banks, and our government-FHA, would make any loans without a minimum of 20% down payment. Home defaults will likely continue if down payments of less than 20% are allowed. Once the government stops artificially keeping interest rates down, prices will likely remain flat or decrease, thereby creating a situation where homeowners, with low down payments, have no equity in their homes.

FHA is akin to the new subprime lender by only requiring 3.5% down payment. Reportedly FHA represents 40% of new loans. FHA should be immediately increased to 10% minimum down payment and then increased by 1% per month until the program reaches 20% down payment. Historically,look at stats prior to 1990, when 20% minimum down payments were the norm defaults averages I believe were less than 1%. Over the past 10 years, low down payments created a larger pool of buyers for the same supply which caused high price appreciation and ultimately a bubble. Incomes did not keep up with home price inflation.

Is there any thought given to extending the $250K limit on insured deposits past year 2013?

Larry Reagan
Mountain View
California

Too big to fail is really too interconnected to fail. Given that a bank like Citibank, which is still in a lot of trouble, could collapse how does the FDIC go about seizing such a bank that has both investment banking functions and significant international business? Was this why Citibank wasn't federalized during the banking crisis?

Perhaps a general question on what it means, going forward, that the FDIC has gone from a simple insurer of deposits to a guaranteer of debt financing for LLP/PPIP. Basically a shift in roles: from programs purely helping depositors ("ordinary" folk), to instead those that help financial institutions. That's a significant change.

Questions like: Is this consistent with the mission of the FDIC? What do these expanded powers mean in terms of risk/cost? Will the FDIC return to its normal function or is this a new paradigm?

By improving the financial position of the firms such programs will necessarily benefit the bankers, the shareholders, bond holders, etc. It's arguable if this is fair, if this will work, or if the FDIC should even be doing this.

What political, economic, or social events will need to occur in order for legislators to become sufficiently informed about the current economic conditions to act proactively in reclaiming control of banking and financial markets from those nondemocratic, non-free market agencies (Treasury, Fed, Primary dealer/brokers, etc.) that currently exert inordinate control?

Sheila:

US Code Title 12, Chap 16, Section 1831 mandates that you take prompt corrective action when any bank's assets cannot be liquidated "at or above par."

This is THE LAW. Why won't you do your job?

You have a chance to be a significant part of history.

Please tell us right here, today, the 500 to 1000 institutions that are insolvent, wipe out the shareholders, and let's get it over with. If you wait, it's the 1930's - and you know it.

Someone in Government needs to tell the president and his economic advisors -- really just extensions of Wall St -- how angry the american people as a whole are with this financial debacle. We see the government being run by the wealthy, for the wealthy, except when the wealthy need bailing out and then the tax payer becomes necessary. Can you tell the d.c. insiders that people are sick of this and want some real reform, including doing away with "too big to fail" and breaking up those institutions and getting the tax payers their money back. Why does the average person always take the fall, while the wealthy just continue to rake in the dough??? (sounds simplistic but here it is a fact!)

Someone in Government needs to tell the president and his economic advisors -- really just extensions of Wall St -- how angry the american people as a whole are with this financial debacle. We see the government being run by the wealthy, for the wealthy, except when the wealthy need bailing out and then the tax payer becomes necessary. Can you tell the d.c. insiders that people are sick of this and want some real reform, including doing away with "too big to fail" and breaking up those institutions and getting the tax payers their money back. Why does the average person always take the fall, while the wealthy just continue to rake in the dough??? (sounds simplistic but here it is a fact!)

First, I would like to thank you for being one of the very few voices of reason in our present government.

The fed funds rate is presently 2,700% below the 10 year treasury yield. This is about 8 times more liquidity that is being forced into the banking system as the 2003 Greenspan liquidity jolt that helped cause the housing bubble and Credit Crisis. Do you think the present tidal wave of liquidity will eventually cause an equal amount of dysfunction in the economy as the 2003 wave?

Ms.Bair

What would you think if President Obama put Brooksley Born, former head of the Commodities Futures Trading Commission, in charge of writing and enforcing laws to cover the trading of financial derivatives?

She had the courage and tenacity to challenge Greenspan in Congressional hearings about the need to regulate financial derivatives ten years ago. Wouldn't she be an ideal person to put in charge of fixing the financial derivatives mess that will sink us once again if left unchanged?

Bob Balhiser
Helena, MT

I would like to say how lucky the U.S. has been to have Ms. Bair at the head of the FDIC in this crisis.

My question concerns the plan to raise money from the banks -- with the possibility of paying in three years of deposit insurance premia to meet the FDIC's cash needs, with the possibility of banks being allowed greater leeway on accounting in exchange. Is this not precisely the wrong message to send to an industry that was concealing its risks during the runup to the crisis? Would it not be better to get a cash injection from Congress, notwithstanding how unpopular this would be?

Despite similar economic problems, Canada's banks have weathered the current economic storm much better than US banks and not a single Canadian bank has needed to be closed or rescued.

Suppose you could pick ONE aspect of Canadian financial regulation or law to be enforced in the US. What would it be? Or is there nothing to learn from Canada?

Two words: Glass-Steagall

Why on earth are we not repealing Graham Leach Bliley?

I would like to know her response to the following:

1. There is a proposal being floated out there whereby healthy banks could end being assessed substantial fees if a "too big to fail bank" goes under. Why should healthy banks be penalized and have to pay for incompetent management and inadequate regulatory scrutiny?

2. Many banks in the US are significantly under capitalized and when you properly mark their assets, are technically insolvent. When are the regulators going to come this realization and resolve these bad banks instead of following a slow drip approach of seizing 2 or 3 of these bad banks per week?

3. Have her comment on the pending tidal wave of commercial real estate defaults looming on the horizon (in NYC for example, many leases are coming due in the next 2 years. The renewal rates on these leases will be much lower than the projections that were used to justify the purchase of the buildings causing declines in valuation, cash flow issues, etc.).

4. Have her discuss the failure of the TARP program. Only a third of the funds were used and it did not spur lending.

I get nervous when I hear that they're going to reorganize the regulatory oversight of the big banks. Yes, I'm sure that this will do some good, but it seems that we want to discourage banks (or companies in general) from getting "To Big To Fail" in the first place.

What would be wrong with placing additional tax or other burdens when companies grew too large? For example, if a company has been TBD percent of the GDP for the last three years their tax rate goes up, a special tax kicks in, their bond rating is automatically lowered, or some such. This would provide an incentive for companies to break themselves up as they grew.

On a related note: Is there any advantage to us as a country to have big, Big, BIG banks? From all the press reports, it's not that they were making Big Loans to small countries. It sounds like they were just doing more of the same. So I don't understand what we gain from allowing them to grow so big. (Aside from the fact that we don't like telling businesses how to run their businesses.)

Do u think its time to rethink the regulatory framework(and work on fixing structural problems of 'too big to fail' financial institutions and avoid bubbles that seem to crop up once every 10 yrs in the world's largest economy)? Btw, thank you for all your efforts...u r a true role model for all women!

It's my understanding that the FDIC must act against undercapitalized depositories in a prompt manner. Yet FDIC deferred to Treasury in not only not acting against the largest banks, but allowing gigantic transfers of value in the form of capital and guarantees from taxpayers to these businesses.

Please explain the politics which made this necessary.

This is already in a couple of questions, but I also would like her opinion on the Bernie Sanders approach (i.e. to big to fail is to big to exist).

How much money do you actually have to insure the depositors?

I'm wondering which failure of 2008, Wachovia or WaMu, she feels was handled better and why the outcome for two so similar entities (as far as numbers and timing went) differed so drastically?

Many have argued that there really aren't any sizable benefits from economies of scale when it comes to the banking industry. Assuming this is the case wouldn't it make more sense to channel money to smaller banks?

Are the top level executives at large investment banking firms really as nonreplaceable as they would like us all to believe?

Sheila Bair has been the most creative government official and the FDIC has done a good job.
I wish she could replace Tim Geithner and I hope Larry Summers resigns soon to return to the D.E. Shaw hedge fund . Reinig in Wall Street is the only way to re-direct our dollars back into jobs and the real economy.

Regardless of your position today, why did you feel the need on the eve of a government vote on TARP, to take over a 100+ year old institution in WAMU and sell its assets to JP Morgan for pennies on the dollar? Besdies saying your welcome to the JP Morgan Management and shareholders, what do you have to say to WAMU shareholders in regards to your unprecendented intervention?

Andy
Wheaton Illinois

As a Citibank customer, I feel the compelled to switch banks, especially since I received a letter about the change in FDIC protection. Although, I am still considered protected (being a minute fish in an ocean), just getting the letter made me wonder about the potential problems I may face remaining at a bank like Citibank. Their policies to charge are ever-increasing and I am concerned about these changes as well as potential problems in the future. What does the FDIC feel needs to be said about Citibanks and other multinational banks to average Americans?