Sheila Bair, chairwoman of the FDIC, says stricter regulation of banks and non-banks can protect consumers and eliminate the need for more bailouts.
By non-banks, she means payday-style lenders, mortgage and credit-card lenders
Addressing protestors outside the American Bankers Association annual meeting in what resembled a political campaign rally, Bair lauded the Obama administration’s plan for a new consumer financial protection agency (CFPA).
“One of my messages is to get in there and support the CFPA,” she said.
“By regulating the non-bank shadow sector for the first time, this new agency can help prevent future abuses. I hope we see other measures taken that will create a more resilient, transparent and better regulated financial system including an end to the too big to fail doctrine.”
Bair closed her short address with a rousing, “No more bailouts, no more bailouts.”
She detailed why the CFPA is necessary.
“Looking at indecipherable credit card statements, and documents and mortgages you can't understand, and APRs from payday loans, and high overdraft fees, I don't know how anybody can say we've done a good job protecting consumers and financial services."
The lack of such protection played a major role in precipitating the financial crisis, Bair said.
Another one of Obama’s financial reforms — stricter regulation of derivatives — has received backing from an unlikely figure.
That’s hedge fund titan Ken Griffin, head of Citadel Investments. He wrote in the Financial Times that the plan is “wise.”
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