Sheila Bair's Self-Serving Support Of Dodd's FINREG Bill

I happened to see FDIC chairman Sheila Bair interviewed at length on CNBC last Friday.

If you ever need proof of how regulators become captive to the majority in Washington, and learn not to express their true views, this interview was it.

Asked about the deeply-flawed Dodd FINREG bill, Bair of course supported it. Keeping mum about the actual open door to bailouts of creditors of failed banks, and the FDIC's favored status as the 'resolution authority,' Bair just nodded slowly, sagely, allowing how it would be an improvement over current regulation.

What did the CNBC co-anchors expect? Bair's agency won the fight to be the go-to outfit for financial sector liquidations. And there aren't even any rules or guidelines to restrain the FDIC, under the bill, from declaring any firm they choose to be in trouble and, therefore, closed.

Continuing their wide-eyed, naive trust in all government officials towing the ruling party line, the CNBC staff listened with rapt attention to every word Bair uttered. Never questioning her motives or her agency's ability to handle failed institutions that aren't small or midsized banks?

Peter Wallison, in a recent Wall Street Journal editorial, noted that the FDIC has no skills in handling the variety of businesses in a modern investment bank like the now-defunct Lehman. His point, of course, was that if the FDIC had been responsible for closing and managing Lehman, it would have been hopelessly overwhelmed by the firm's complexity.

And that's going to be true of the very large financial firms which Dodd's bill envisions failing.

It's gotten to where you really cannot trust the bulk of CNBC's on-air personnel to ask anyone real hardball questions that might provide real insights or truth.