Federal Deposit Insurance Corp. Chairman Sheila Bair will leave her post July 8, a week after the official expiration of her term, the agency announced.
Bair, whose term officially ends June 30, plans to stay the extra days to finish work on the rule requiring systemically risky firms to outline how they can be unwound in the event of a collapse, a person briefed on the matter said.
The final rule on the so-called living wills is to be voted on during an FDIC board meeting in the first week of July, said the person, who spoke on condition of anonymity because the plan isn’t public.
The FDIC rule will require financial companies with at least $50 billion in assets to provide information on their debt, funding, capital and cash flows. The plan is designed to mitigate some of the risks that exacerbated the credit crisis after Lehman Brothers Holdings Inc. (LEHMQ) collapsed in 2008.
Bair, 57, said at a Federal Reserve Bank of Chicago meeting May 5 that the Fed and FDIC must be willing to force systemically important financial firms to create “credible and actionable” resolution plans.
Companies failing to submit credible plans could be subject to more stringent capital, leverage or liquidity requirements as well as restrictions on their growth, activities or operations, agency officials have said.
Writing a Book
Bair, who is serving as the 19th chairman of the agency, has said she was not interested in renewing her term and intends to write a book and spend time with her family.
“Consistent with previous public statements, Chairman Bair has announced her intention to depart the agency following the expiration of her term,” the FDIC said today in a statement. Bair will lead her final meeting as chairman during the first week in July, the agency said.
President Barack Obama faces several high-level regulatory vacancies within the next several months, including the FDIC chair and the head of the new Consumer Financial Protection Bureau, which is scheduled to officially start work on July 21.
Bair, a former assistant Treasury secretary and New York Stock Exchange executive, took the helm at the FDIC in June 2006 after being appointed by President George W. Bush to replace Donald Powell, who moved to the Department of Homeland Security.
A Republican who once served as a policy aide to former Senator Bob Dole, she drew praise from Democratic lawmakers in guiding the FDIC through a financial crisis that saw banks fail at the fastest pace since the savings-and-loan crisis of the 1980s and early 1990s.
At the same time, she found herself at odds with government officials including Treasury Secretary Timothy F. Geithner, who was president of the Federal Reserve Bank of New York during the Bush administration and sought to have her replaced as chairman after Barack Obama was elected president in 2008.
“In the Bush administration, she was not seen as a team player,” former FDIC General Counsel John Douglas, now a partner at the Davis Polk & Wardwell law firm in New York, said in a 2009 interview. “It was clear she was standing up for what she thought her role was as chairman of the FDIC.”
For her part, Bair rejected the criticism and said reports of conflict were overblown by the media.
“People need to make up their minds whether they want us to be a tough regulator or a weak, accommodating regulator,” she said in 2009.
Lawmakers including Representative Barney Frank, the Massachusetts Democrat who led efforts to enact the regulatory overhaul that bears his name, praised Bair for pushing banks and regulators to protect homeowners as foreclosures soared after the collapse of the U.S. mortgage market.
Bair successfully pushed for the FDIC to be given authority under the Dodd-Frank Act for unwinding failed companies whose collapse could threaten the broader economy as happened in 2008. The living-wills measure is part of that authority.
Bair, who was born in Kansas, is married and has two children.