Sheila Bair Talks Eurozone, and Gulf of Mexico Spill Impact
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FOX Business Network's Peter Barnes sat down with FDIC Chairwoman Sheila Bair for a wide ranging interview that covered topics from the financial uncertainty in the Euro Zone to the oil spill in the Gulf of Mexico's impact on the economy of the Gulf States.
When asked on whether the economic turmoil in Greece would spread to other countries, including the U.S., Bair said that at this point there is no substantial threat to the problems among European countries moving to the financial system of the U.S.
"I would direct exposure of U.S. banks to the jurisdictions in question is not great," Bair said. "We think Europe understands they have some problems that need to be dealt with and so we think the situation will not be destabilizing, but it's obviously something we're monitoring carefully."
She added that government all over the world need to understand what is going on in Greece and that it need to be a wake-up call to nations that have become over extended, which in her estimation includes the U.S.
On the situation with the Gulf oil spill, Bair said that the FDIC is advising banks to show compassion and offer flexibility to those that have been and will be impacted.
To clarify what kind of flexibility will be shown to the affected parties in the Gulf States; Bair said the FDIC is advising banks "to give them leniency in terms of making their loan repayments if they need a little extra time because of disruptions in their businesses because of this economic situation -- this environmental situation."
"So I think we're asking banks to provide that kind of flexibility and we'll continue to do that and provide support to the VODs that we regulate in the area."
As far as the wide ranging economic impact of the oil spill, Bair said that the economists for the FDIC are looking into it but are not seeing it yet.
Bair also explained the new FDIC resolution mechanism that has replaces the $50 billion bailout that was removed from the financial regulation reform bill that is moving through the Senate.
"It pretty much works the way we have the situation we have for banks now. So the entity is put into a receivership. Large entities frequently are put into a bridge institution operating facility so you can actually keep the place running, keep lights on as you break it up and sell it off in a timely way. The shareholders and creditors take the losses, and it is an orderly process because we so have the ability to provide temporary bridge funding to keep the place operational as you break it up and sell it off."
She added that moving forward that going forward that will be no bailing out of the shareholders and creditors of individual failing institutions.
"So the capital structure of the institution will be available to absorb losses so that the financial need -- when the resolution is finished there shouldn't be any loss if this works the way it should. And again, if there is inadvertently loss, it would be assessed to the industry."
When asked on whether the economic turmoil in Greece would spread to other countries, including the U.S., Bair said that at this point there is no substantial threat to the problems among European countries moving to the financial system of the U.S.
"I would direct exposure of U.S. banks to the jurisdictions in question is not great," Bair said. "We think Europe understands they have some problems that need to be dealt with and so we think the situation will not be destabilizing, but it's obviously something we're monitoring carefully."
She added that government all over the world need to understand what is going on in Greece and that it need to be a wake-up call to nations that have become over extended, which in her estimation includes the U.S.
On the situation with the Gulf oil spill, Bair said that the FDIC is advising banks to show compassion and offer flexibility to those that have been and will be impacted.
To clarify what kind of flexibility will be shown to the affected parties in the Gulf States; Bair said the FDIC is advising banks "to give them leniency in terms of making their loan repayments if they need a little extra time because of disruptions in their businesses because of this economic situation -- this environmental situation."
"So I think we're asking banks to provide that kind of flexibility and we'll continue to do that and provide support to the VODs that we regulate in the area."
As far as the wide ranging economic impact of the oil spill, Bair said that the economists for the FDIC are looking into it but are not seeing it yet.
Bair also explained the new FDIC resolution mechanism that has replaces the $50 billion bailout that was removed from the financial regulation reform bill that is moving through the Senate.
"It pretty much works the way we have the situation we have for banks now. So the entity is put into a receivership. Large entities frequently are put into a bridge institution operating facility so you can actually keep the place running, keep lights on as you break it up and sell it off in a timely way. The shareholders and creditors take the losses, and it is an orderly process because we so have the ability to provide temporary bridge funding to keep the place operational as you break it up and sell it off."
She added that moving forward that going forward that will be no bailing out of the shareholders and creditors of individual failing institutions.
"So the capital structure of the institution will be available to absorb losses so that the financial need -- when the resolution is finished there shouldn't be any loss if this works the way it should. And again, if there is inadvertently loss, it would be assessed to the industry."
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