Sheila Bair Steps Down as FDIC Chair

Vice Chair Gruenberg to Assume Role Temporarily
Sheila Bair Steps Down as FDIC Chair
After five years in what she characterized as a remarkable journey, Sheila Bair has stepped down as chairwoman of the Federal Deposit Insurance Corp., the FDIC announced Friday. She had served as its chair since June 26, 2006.

Bair will join the Pew Charitable Trusts as a senior adviser on Sept. 7, after spending the summer with her family.

"It has been a remarkable journey; I feel honored to have served two presidents and privileged to have led this great agency that worked so effectively to preserve confidence and stability in the banking system at a critical time," she said.

Vice Chairman Martin Gruenberg will assume the role of acting chairman, effective at the close of business Friday. Gruenberg has served as vice chairman of the FDIC Board of Directors since Aug. 22, 2005. He has previously served as acting chairman from Nov. 15, 2005, to June 26, 2006.

Bair was the 19th chair of the FDIC. She came to the position after holding several positions in banking and finance. Before joining the FDIC in 2006, Bair had served as the Dean's Professor of Financial Regulatory Policy for the Isenberg School of Management at the University of Massachusetts-Amherst, beginning in 2002. Previously, she served as assistant secretary for financial institutions at the Department of the Treasury, senior vice president for government relations at the New York Stock Exchange, commissioner and acting chairwoman of the Commodity Futures Trading Commission and research director, deputy counsel and counsel to Senate Majority Leader Robert Dole.

While at the FDIC, Bair presided over a tumultuous period in the nation's financial sector. During her tenure, the FDIC worked to manage losses and liquidity through traditional industry-funded resources. In response to the financial crisis, Bair developed innovative and stabilizing programs that provided temporary guarantees to unfreeze credit markets and increased deposit insurance limits. In 2007, she was an advocate for systematic loan modifications to lesson the blow of forthcoming foreclosures. She also led FDIC resolution strategies to sell failing banks to stronger and healthier institutions, while providing credit support of future losses from failed banks' troubled loans. That strategy saved the Deposit Insurance Fund more than $40 billion.

Bair also worked to expand the FDIC's powers and authority under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The law extends the FDIC's resolution process to financial institutions, effectively attacking the doctrine of "too-big-to-fail."

Bair's work at the FDIC focused on consumer protection and economic inclusion. Under her leadership, the FDIC issued early calls for interagency guidance addressing high-risk mortgages, and was among the first to see the dangers of these unaffordable mortgages to the broader banking sector. She championed the creation of an Advisory Committee on Economic Inclusion, seminal research on small-dollar loan programs, and the formation of broad-based alliances in nine regional markets to bring underserved populations into the financial mainstream.

The FDIC, established in 1933, insures deposits in U.S. banks and thrift institutions for at least $250,000; identifies, monitors and addresses risks to deposit insurance funds; and limits the effect on the economy and the financial system when a bank or thrift fails.

The FDIC directly examines and supervises more than 4,900 banks and savings banks for operational safety and soundness, more than half of the institutions in the banking system. The FDIC also serves as the primary federal regulator of banks that are chartered by states that do not join the Federal Reserve System. In addition, the FDIC is the back-up supervisor for the remaining insured banks and thrift institutions.

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