Sheila Bair, former Chair of the FDIC, spoke to The Exchange about concerns over the banking system.
Bair noted that short-selling bans, which were implemented during the Great Financial Crisis and are being considered now, may not be the best solution.
She emphasized that bank share prices have little to do with whether a bank is considered insolvent and needs to be closed.
Bair also commented on the possibility of large banks acquiring struggling banks, and said that open bank acquisitions are likely easier than waiting for government intervention.
However, she expressed concern about the looming issue of a recession and monetary policy.
Bair said that the Fed’s focus on short-term rates and the steeply inverted yield curve may pose a problem for banks that borrow short and lend long.
