Bob Dole: Bank Nationalizer Sheila Bair Putting The”Compassion” Back In Conservativism

March 27, 2009 2:46 p.m.

One of the great ironies of this financial crisis (and there are lots) is that the only financial regulator remotely capable of inspiring confidence in anyone is a Republican Bush appointee who’s gone largely ignored by the White House since Tim Geithner reportedly tried to push her out of her job for not being enough of a “team player.” We speak of course of FDIC Chairman Sheila Bair, who has gotten so much practice nationalizing financial institutions since the crisis began she let 60 Minutes come watch and record one for a segment earlier this month. And now she’s been pushing for the authority to take her operation to the likes of AIG, Bear Stearns and the rest of the Too Big To Fail cartel. (And as finance blogger Felix Salmon explained in the New York Times today, she may get her wish as part of Geithner’s public-private toxic asset buyout plan.)

On Wednesday Bair went on the hyperconservative supply-side pundit Larry Kudlow’s CNBC show to sweetly explain why, when a company like AIG fails, she ought to be able to

come in, repudiate employment contracts, pick and choose who you want to keep, who you want to get rid of, what you want to pay them. Replace the management, get rid of the boards, bring in better management and do an orderly unwinding of the entity.

Kudlow seemed stunned. “You’ve done this before?” he asked. (About 50 times since the crisis began.) But he remained polite in the face of all this suspiciously socialist-sounding rhetoric — because it came from a Republican. Her old mentor Bob Dole even confirmed it, an American Banker report today reveals…

“Sheila’s from Kansas. We’re not loaded with rich people, just a lot of hard-working farmers and small-businessmen eking out a living. So she understands that people need help fixing their problems…With Sheila it’s not just, ‘somebody lost their home, isn’t that a shame?’ She’s been saying, ‘How can we prevent it or delay it?…That’s compassionate conservatism. How can people be critical of that?”

Good question we’re happy to answer! Back in October, as Wachovia was collapsing under the weight of toxic synthetic mortgages and the like, Bair was in the final stages of engineering a last-ditch deal for Citigroup to buy most of the bank, with government help, for two billion dollars, when Wells Fargo offered more money to take over the entire bank without public assistance. Bair steered Wachovia to the better deal, since that was the bank’s fiduciary responsibility to its shareholders and Bair’s civic duty to us taxpayers, but Citigroup, where Bob Rubin was still on the payroll and the payroll was not yet being financed by his old protege Tim Geithner, was royally pissed.

But since then Bair has made friends with the likes of Barney Frank, Chris Dodd, Ben Bernanke and Caroline Kennedy, who just bestowed upon Bair — along with a colleague from her days at the Commodity Futures Trading Commission named Brooksley Born, whose repeated and strenuous attempts to regulate derivatives in 1998 were blocked by the aforementioned Bob Rubin — a “Profile In Courage” award for her public service.

And now Tim Geithner, down to his last fifty billion dollars in TARP funds, may find himself befriending Bair as well — because it’s the FDIC’s $500 billion lending facility with the Federal Reserve he needs to draw on to offer the non-recourse “Legacy Loans” to money managers as incentive to buy up some of those toxic assets. That means Bair will in effect be charged with insuring the loans extended to said money managers — and like most insurers not named AIG, she believes in conducting due diligence before handing out guarantees. The agency is now publicly seeking advice from the financial community on how best to execute the program, and earlier this week there was even talk that she might be next in line for Geithner’s job.

Bair has started to gain support, even from those who once considered unseating her, sources said.

You gotta wonder at this point if “sources” = Geithner.

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