Welcome back to our Blooom Brain Pickers series! We’re picking the brains of the best in the biz to inform, entertain, and most of all, educate you when it comes to making personal finance decisions. Today we are honored to feature former FDIC Chair, Sheila Bair.
Sheila Bair has had a long and distinguished career in government, academia, and finance. Twice named by Forbes Magazine as the second most powerful woman in the world, she is perhaps best known as Chair of the Federal Deposit Insurance Corporation (FDIC) from 2006 to 2011, when she steered the agency through the worst financial crisis since the Great Depression. For her efforts to protect bank depositors and homeowners during the crisis, she received the Kennedy Library’s Profiles in Courage Award, and was named “the little guy’s protector in chief” by Time Magazine. A former finance professor and college president, Ms. Bair has been nationally recognized for her innovative initiatives to make college more accessible and affordable. She is a frequent commentator and op-ed contributor on financial regulation and the student debt crisis, as well as author of the NY Times Best Seller, Bull by the Horns, her 2012 memoir of the financial crisis.
Ms. Bair currently serves on a number of corporate governing boards, including Host Hotels, Bunge Ltd., and Fannie Mae, and on the International Advisory Board to the Santander Group. She also serves on the board of Paxos, a blockchain technology trust company, and as an advisor to several fintech startups. She is a founding director of the Volcker Alliance, established by Former Federal Reserve Board Chair Paul Volcker to build trust in government and is the founding chair of the Systemic Risk Council, which advocates for financial stability. In addition, she is a Senior Advisor to the Peter G. Peterson Foundation on financial issues confronting young people.
Are there lessons from the Financial Crisis that could help us in our current situation?
Get the help to Main Street. We didn’t do that with the bailouts of 2008/2009. Government support was highly concentrated on the financial sector. It didn’t trickle down. Even while Wall Street was reaping profits– and paying bonuses– by the end of 2009, it took about 10 years for most working families to recover. This time around, the Fed is making yeoman’s efforts to reach the real economy but their current monetary tools are just not well equipped to do so. Their programs are still primarily helping big banks and big corporates. On the fiscal side, the small business programs and cash payments to households, including EIP payments are helping. EIP has boosted the consumer spending which underpins our economy. But the process of getting those payments to households has been slow and arduous. Digital currency technology provides part of the answer. Giving all families a digital wallet where they could receive Fed-backed digital currency would be much faster and much more secure against fraud than our current system. The technology is there and could be in place within the next few years if we have the will to do it.
What is the best and/or worst financial advice you have ever received personally?
Worst Advice: getting a credit card fresh out of college to “build my credit history”. I didn’t have the knowledge or skills to manage credit card debt, and quickly became addicted, eagerly accepting all those credit card offers banks were sending me.
Best Advice: stick to one credit card.
What do you think should be done to improve financial literacy in our country?
Start at an early age. Embed it in elementary and secondary core curricula like math. Be serious about it, with quality content written by un-conflicted sources (unlike the industry literature that advised me to get a credit card.) And don’t use it as an excuse for anti-consumer practices. One thing that really sends me up the wall is to hear industry officials trying to defend irresponsible financial products by saying we just need more financial education.
You have paved the way for a lot of women in the banking/finance industry, what advice would you give to young women interested in banking/finance?
It can be a great career choice. Financial services done right can be of huge benefit to families and Main Street businesses. Don’t forget that there are human beings on the other side of those services you are providing. Treat them right. Research shows women tend to be more compassionate and a bit more risk averse when it comes to finance. We should be proud of those traits and use them to improve banking culture.
As a children’s book author, what would your advice be to parents when it comes to teaching financial literacy?
You need to be financially literate before you can help your children. So educate yourself and don’t be afraid to ask questions or “look dumb”. I hate to say it, but I think a lot of the esoteric terminology and complexity in financial services today are meant to intimidate consumers into not asking questions. One of the reasons I write picture books for kids is in the hope that parents will read them with their children and learn something themselves.
In your time as FDIC Chair, what was the most challenging aspect of your role?
Trying to get more help for homeowners. We had some success with mortgage relief, but the government should have done so much more.
In your time as FDIC Chair, what was the most rewarding aspect of your role?
Giving people peace of mind about the safety of their FDIC-insured bank deposits. During the depths of the crisis, the late Bill Keane drew a Family Circus cartoon showing Bill peacefully asleep in his bed, with his piggy bank next to him, on which he had drawn “FDIC”. I had that cartoon framed, and it still hangs prominently in our home.