She sounded the warning bell on an impending crisis, she lead FDIC in managing troubled financial institutions and provided one of the most significant arguments in the policy reform at the aftermath. From Nocera’s perspective, Bair’s position on FDIC’s role on regulation and several policies in the financial industry has been effective and correct, but often left unheeded and unappreciated. Two of the most significant of these is: 1) her insistence on greater regulation long before policymakers and experts started to preach it; and, 2) her position that banks in trouble are not necessarily needed to be bailed out. The article, hence, underscore the importance of listening to this lady in the context of averting possible reoccurrence of similar crisis in the future.
Charles Kindleberger’s theory and analyses of financial crises are descriptive and it provided the general basis for Nocera’s agreement with Bair’s position on regulation and the 2008 financial crisis. Kindleberger’s model describes an exogenous shock to the system also called as displacement. The causes of such displacement are varied and could provide diverse degree of crisis severity. The tendency to speculate as well as the inevitable complacency that comes with a stable and growing financial economy on the part of regulatory bodies are crucial elements in aggravating such displacement. ...Show more