Banking Law

While Liz Warren was turning on the charm and her opponents were melting like school girls with Bieber Fever, Sheila Bair ventured into the lion's den to tell bankers exactly what they didn't want to hear and got an earful of raspberries in reply.

In what the Wall Street Journal (paid subscription required) called a "charm offensive," Liz schmoozed her critics across the country. While she didn't thrill everyone, she made some headway, especially, it appears, with some community bankers.

It's clear some bankers, especially at the smaller institutions known as community banks, are warming to her. These banks, which can be found in every congressional district, wield clout in Washington disproportionate to their size.

I don't know what community bankers the Journal has been talking to, but from the ones who talk and write to me, I'm seeing an attitude expressed about Ms. Warren that is a long way from what I would describe as "warm." Steve Bartlett, former Texas congressman and current president of the Financial Services Roundtable, perhaps expressed best the mixed feelings toward Ms. Warren of even community bankers inclined to like her personally, when he observed that while she's won respect, bankers are still very concerned about what havoc she may wreak through oppressive regulations enacted and enforced by an agency that is being set up by a person who has, in the past, made harsh statements about banks, statements that in some cases make it hard to presume that she and the agency she claims she conceptualized will be fair and balanced. As Steve says, there are billions of dollars at stake.

I think she's got an uphill battle to win over her critics, especially in Congress. Some Republicans may pay lip service to the notion that Liz is "not so bad," but their actions are speaking louder than their words. However, you have to give her credit for convincing people she's not a snake, but a snake charmer.

FDIC Chairman Sheila Bair, whose career arc as a bank regulator is on a different path than Ms. Warren's at the moment, showed a lot of guts yesterday by addressing an American Bankers Association conference and telling the audience that bank jobs weren't jobs "in the real economy."

Federal Deposit Insurance Corp. chairwoman Sheila Bair on Wednesday told a sometimes hostile crowd of mostly community bankers that increasing the size and profitability of the financial services industry isn?t and shouldn?t be the goal of financial economic policy.

?In policy terms, the success of financial sector is not an end in itself, it is a means to an end. It is to support the vitality of the real economy,? Bair said to an American Bankers Association conference that sometimes jeered and heckled her. ?What really matters to the life of our nation is create more well paying jobs and enable entrepreneurs to create new jobs.?

That's one way to warm up a crowd.

She then started chanting her "what's good for the consumer is good for the bank" mantra, which set the pagan bankers in the audience to "groaning," according to Market Watch. The talk ended on a sour note, as hard as that is to believe.

?Probably the best news at the conference was that Sheila Bair has only about 90 more days,? said one banker to the group before asking a question. Bair, who had left the room, has said last year she plans to step down in June at the end of her term.

I guess for many bankers, June 30, 2011 will not come a moment too soon. For Sheila, the hostile reception only builds her "street cred" for her next job as Executive Director of ACORN.