(FDIC Chairman) Bair calls U.S. bank bailout "not a good thing"

WASHINGTON (Reuters) – Leading U.S. bank regulator Sheila Bair said on Friday that the government's capital injections into the largest banks was "probably not a good thing."

Bair, the chairman of the Federal Deposit Insurance Corp, said the billions of dollars of capital infusions last year had a terrible impact on public perception of the financial industry and government regulators.

"I think at the time it sounded like the right thing to do and, again, it was part of an international effort, but I just see all the problems it's created," Bair said during an interview with PBS NewsHour. "I think we would have tried to dissuade Treasury from making these capital investments."

During the height of the financial crisis that had virtually frozen credit markets, the Treasury Department in October 2008 injected $125 billion into the nine largest U.S. banks.

The capital investments were part of the $700 billion Troubled Asset Relief Program, which was originally pitched to Congress as a way to absorb banks' toxic assets but was switched to become largely a capital infusion plan to shore up banks' balance sheets and encourage them to lend.

Public outcry followed the investments, which largely came to be referenced as government bailouts. Lawmakers raced to attach more conditions, such as restrictions on compensation, to the capital injections.

"It's had a terrible, terrible impact on public attitudes toward the financial system, toward the regulatory community," Bair said. "It's created all sorts of issues about government ownership of these institutions, what happens if they get in trouble again."

what happens if they get in trouble again."

Again hell, when are heads going to start rolling for this one.

Paulson should be the first in line:

Youtube and look up William Black. He was the fed regulator who closed down Lincoln S&L and uncovered the Savings and Loans Crisis. During his investigation, Keating the owner of the S&L actually had PI investigate him, threatened his career and life, and had unwitting politicians launch Congressional/Senatorial inquiries on his actions. One of them was Sen McCain.
Obama promised voters that the people on Wall Street will be held accountable if they broke the law. Instead of calling experienced guys like Mr Black for advise, Obama DoJ had several hundred federal agents field and review tens of thousands of complaints by customer and investors against various Wall Street firms. Obama admin basicly diluted the investigative efforts. According to Mr Black Obama could easily focus a hundred agents on Moody and other rating agencies on Wall Street and force them to explain how they can rate Mortgage Back Securities riddled with liar loans and subprime loans AAA after the banks refuse to provide the financial data on the securities to their analysts. It is like GE refusing to provide samples of their latest toasters to Underwriter Laboratory but expect the laboratory to assign a UL label on the appliance. The current SEC/DoJ investigation is so diluted that it will catch only a handful of violators while the majority will escape prosecution due to the statue of limitation laws.

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