A former bank regulator says she favors Joe Biden and Elizabeth Warren among the field of Democratic presidential candidates, but says Warren is the best pick on issues related to financial stability.
Sheila Bair, who served as the head of the Federal Deposit Insurance Corporation from 2006 to 2011, told Yahoo Finance’s On the Move that Warren is “absolutely the best candidate” on policies related to the banking industry.
“Without fundamental change, you get this relentless lobbying attack now because the big banks are just as big and powerful as ever,” Bair said Tuesday.
Bair, a Republican, served as FDIC chair during both the Bush and Obama administrations but says she does not “feel good” about the Trump administration’s deregulatory policies.
While Bair acknowledged that banks hold more capital and liquidity now than they did before the financial crisis, she said post-crisis reforms have only led to “incremental” improvements to bank regulations.
Bair said she supports Warren’s efforts to reinstate Glass-Steagall, a 1930s law that separates investment banking from commercial banking. Bair added that such a law would break up power in a banking industry that she views as too concentrated.
“That’s really what you have to do to get fundamental change because the people who benefit from the status quo are going to keep lobbying for the status quo,” Bair said.
Glass-Steagall has been a recurring talking point in Washington. Breaking up the big banks has been a bipartisan policy at times; the Republican party’s official platform in the 2016 election was for a reinstatement of the Glass-Steagall Act.
Early in his presidency, Trump said he was “looking at” reviving the law, which was quickly walked back by Treasury Secretary Mnuchin in the days after.
Since the financial crisis, there have been several iterations of Glass-Steagall legislation proposed on Capitol Hill. None of them advanced out of their respective committees, underscoring the political difficulty in passing such a law.
Still, Bair says she would support Warren on “common sense” legislation that would break up the big banks.
Bair said Warren would broadly have the “spine” to enact bold reform, which would add teeth to Warren’s proposal for a wealth tax as well.
Broadly, Bair said she thinks Biden has the “most sophisticated understanding of the art of the doable.” In a recent op-ed in The Washington Post, Bair wrote that Biden and Warren are the two best candidates with “strong records of public achievement,” but has not specifically endorsed a candidate yet.
Brian Cheung is a reporter covering the banking industry and the intersection of finance and policy for Yahoo Finance. You can follow him on Twitter @bcheungz.