Re: Who Regulates the Regulators? (Glenn Loury & Ross Levine)
I don't know the wider story of Sheila Bair but it is worth bearing in mind that the FDIC is one of the "umpires" for commercial banks. To the extent they are still separate, commercial banks are the FDIC's home team in Ross's analogy while investment banks are the away team. So with the limited facts presented here, perhaps she shouldn't be singled out for such praise. (Though I would would say she was right in her call and there may be wider facts that justify the reputation she is getting here.)
Glenn's call for more diversity in regulating bodies is laudable in theory but much harder in practice. Ross called him on the issue of needing expertise but there is another one. Glenn liked the idea that a "working class" person might add to governance. The problem is keeping them "working class" while they sit on the regulatory board, are they paid less lest their purity be corrupted? Are they cycled through as they become chummy with the plutocrats?