Is the US economy facing another crisis?

Would the US be able to endure another financial crisis? Former FDIC head says maybe not.


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צילום: Brendan McDermid, רויטרס

Sheila Bair was the head of the Federal Deposit Insurance Corporation (FDIC) during the 2008 financial crisis. She warns that American democracy may not be able to withstand another bank bailout.

"I think there was growing recognition we had a very serious problem. Certainly during that period in the fall of 2006, I stepped up both internal and external advocacy of putting some mortgage-lending standards in place, and we really needed the Fed to step up and do that because only the Fed had the power to write rules for both banks and non-bank originators. So we started that effort".

"But we carefully watched the housing market turn and the delinquencies and defaults starting to accelerate fairly significantly by 2007. I think there was a growing recognition, by the spring of 2007, we were pushing for system-wide loan modifications. We convened several meetings at the FDIC with the securitizers — Fannie and Freddie and FHA, all of the ones that guaranteed mortgages, the rating agencies, everybody tried to get everybody in the same room to say, 'Look we've got a problem. We need to get these mortgages modified.' It was going to be complicated to do that", she said.

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