BANGOR, Maine — From toddlers and their piggy banks to financial conglomerates and their balance sheets, Sheila Bair has advice for anyone who wants to hear it.
Bair, described in 2008 by Forbes magazine as the world’s second-most powerful woman, has written children’s books, testified before Congress and spread her knowledge in academia. As the chairwoman of the powerful Federal Deposit Insurance Corp., when Bair speaks people listen.
Well, they usually do, Bair told the Bangor Daily News on Wednesday. Despite widespread claims that the financial industry didn’t recognize its undoing until it was too late, Bair said, all the signs were there before the financial meltdown hit in late 2008.
“They just weren’t looking,” said Bair of banks, mortgage houses and a wide swath of the financial industry. “Everyone was making so much money … they just didn’t want to see the truth.”
But that’s all mired in the past, and Bair’s latest focus is talking about recovery, not laying blame. Even though the financial reform bill signed into law last month by President Barack Obama was aimed squarely at banks, mortgage companies and other financial institutions, Bair said, it will affect just about everyone with a bank account or loan. Because of new protections and regulations, consumers can expect more clearly defined financial services and fewer hidden fees.
Another benefit for consumers is that the financial reform legislation will provide regulation and oversight for entities that operate “on the fringes” of the financial industry, according to Bair, such as third-party mortgage companies and organizations that buy and sell loans. The purpose, said Bair, is to ensure that new problems on the horizon can be seen and corrected before it’s too late.
In Maine, that will help what Bair calls “community banks” — a reference to their small size compared to national institutions — by making sure everyone follows the same rules.
“Community banks have been trying to do the right thing,” she said. “They were totally undercut.”
U.S. Sen. Susan Collins, R-Maine, organized a meeting Wednesday between Bair and bank executives from across Maine. The FDIC chairwoman, who is vacationing in Bar Harbor, said the meeting was part of an ongoing effort to reach out to local bankers across the country.
To that end, Bair answered a range of questions from 21 of Maine’s 32 bank presidents. Despite her lofty and influential position, the bank presidents weren’t exactly fawning over her, according to Chris Pinkham, president of the Maine Community Bankers Association.
“I would say the tone was very concerned but very respectful,” Pinkham said during a telephone interview. “This wasn’t a speech where everyone applauded at the end of it.”
Despite that, Pinkham said, Bair’s visit was appreciated.
“This was absolutely a rare opportunity,” he said. “She is the person who can answer all the questions, and her answers were not snippets or sound bites. Her answers were complex.”
But Bair said many of the practices she espouses — such as savings and entrepreneurship — are simple enough for even children’s books, such as “Rock, Brock and the Savings Shock” and “Isabel’s Car Wash,” which she wrote and published in 2006 and 2008, respectively.
“These are not difficult concepts,” said Bair.