ReformingMortgage Finance

Five Basic Principles Are Critical

By Sheila C. Bair

Sheila C. Bair became chairman of the Federal Deposit Insurance Corporation (FDIC) on June 26, 2006. Before her appointment to the FDIC, Ms. Bair was the Dean's Professor of Financial Regulatory Policy for the Isenberg School of Management at the University of Massachusetts- Amherst since 2002. Other career experience includes serving as assistant secretary for financial institutions at the U.S. Department of the Treasury (2001 to 2002); senior vice president for government relations of the New York Stock Exchange (1995 to 2000); a commissioner and acting chairman of the Commodity Futures Trading Commission (1991 to 1995); and research director, deputy counsel and counsel to Senate Majority Leader Robert Dole (1981 to 1988). While an academic, Chairman Bair also served on the FDIC's Advisory Committee on Banking Policy. She received a bachelor's degree from Kansas University and a J.D. from Kansas University School of Law. In November, the Wall St. Journal named her number one on its annual list of Women to Watch.

In the current period of financial stress, the Federal Deposit Insurance Corporation (FDIC) will have a critical role in helping to restore order to financial markets and the banking system. This address describes FDIC actions as of early October 2008, and indicates what is necessary to improve mortgage finance in the future, in particular five basic principles, which are described here. These principles must guide any reform effort. How to apply them will be a challenge, and suggestions for doing so are presented. NABE members could and should make an important contribution to rebuilding mortgage lending in the future.

Presented at the National Association for Business Economics 50th Annual Meeting, Washington, D.C., October 6, 2008

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