While some experts are starting to wax enthusiastic over the banking industry, FDIC Chairman Sheila Bair expresses more caution.
There will be “many more bank failures" ahead, she tells Forbes.
"I think there are still some challenges, I think we need to be realistic. There are still some troubled assets on the books, and we still have an economy that's under significant stress."
And, she says, “we still don't know how deep the recession is going to be.”
The worst of the crisis probably has passed, Bair says. "Hopefully there are no more events that create liquidity stresses on the banks. And now we're having more good old-fashioned capital insolvencies."
Bair worries about the Obama administration’s plan to give the Federal Reserve more regulatory authority.
"No other developed country gives their central bank the kind of power we give our central bank," she says.
Congress should give the FDIC authority to close any financial institution, regardless of size, Bair maintains.
Now the FDIC can close a bank that takes deposits, but not its parent company in all cases. If the FDIC could shutter banks of any size, that would eliminate the "too big to fail" problem, she says.
Treasury Secretary Tim Geithner defends the Obama administration’s decision to hand more power to the Fed.
The central bank “is best positioned” to oversee the biggest financial companies, he told Congress Thursday, adding that the Obama plan gives the Fed only “modest additional authority.”
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