FDIC's Bair emerges as key player in bank rescues

NEW YORK -- Sheila Bair has not been a household name as one of the USA's most powerful women, but the chairman of the Federal Deposit Insurance Corp. is fast making herself known as a central figure in battling the current credit crisis.

Bair, 54, who in 2006 began a five-year term as the 19th chairman of the 75-year-old bank insurance fund, has emerged as a key dealmaker in putting out fires threatening to engulf the whole economy.

In the past two weeks, Bair orchestrated Citigroup's $2.1 billion acquisition of Wachovia's banking business and JPMorgan Chase's $1.9 billion acquisition of Washington Mutual, the 13th bank this year to fail. Bair has gotten high marks for her handling of both cases.

"She's direct, she's clear and she's been really, really professional to deal with," says Jamie Dimon, CEO of JPMorgan Chase. "At one point, they said, 'Would you be willing to buy it?' We bid in that process. It was a simple contract and simple bidding procedure."

After WaMu went into receivership, Dimon got a call on Sept. 25, a Thursday, that his bid won and would be announced Friday. Dimon asked if it could be announced immediately so that JPMorgan's stock would have a full day of trading on the news instead of waiting until Monday. Bair said OK.

Such quick decision-making is seen as essential for an insurer charged with maintaining confidence in the U.S. banking system, both to keep consumer trust in making deposits and for banks to lend to each other to keep money flowing through the economy. The FDIC insures more than $3 trillion in 5,250 banks and savings banks around the country.

"Everybody has to keep their heads, and depositors have to have confidence in the system," says Bair. "Nobody has ever lost a penny in insured deposits. And right now, as this credit crisis gets more severe, those deposits are playing a key role."

The Kansas native and University of Kansas law graduate has amassed an impressive résumé and admits to being "little connected" in the capitals of politics and finance. She landed in Washington, D.C., for a job on the staff of former Kansas senator Bob Dole.