WASHINGTON — Sheila Bair's new book is filled with interesting anecdotes about her tenure as chairman of the Federal Deposit Insurance Corp., but arguably the most fascinating is her recounting of a memorable flight on Air Force One.
The incident took place in February 2009, a month after President Obama had taken office. Although Bair had reservations about the Home Affordable Mortgage Program, fearing it was too complicated and did not provide enough incentives for servicers to participate, she was invited to join the president when he announced the program in Phoenix.
Although she took a commercial flight to Arizona, she was asked to fly back on Air Force One, where she sat with other senior administration staff. Once there, she decided she would do a little reading.
"About halfway through the flight, after a gourmet lunch had been served, I settled in with a copy of Peter Bernstein's Against the Gods: The Remarkable Story of Risk, sipping a Diet Coke and popping nuts out of a small Air Force One china bowl," Bair recounts. "'What are you reading, Sheila?' came the president's voice. I looked up and saw him standing in our staff area."
Bair said that "everyone straightened up" when Obama arrived.
"'It's a book about risk,' I said and smiled — an apt topic and, thank goodness, a substantive book," Bair said. "What would he have thought if I had been reading a Stephanie Plum mystery novel?"
Bair was invited back to chat in Obama's personal office, which she describes as "a spacious room near the front of the plane."
"We must have talked for a good twenty to thirty minutes," Bair writes. "He wanted to hear about our work on loan modifications and my prognosis on the health of the banking system and the overall economy."
Bair, a Republican, said she was "impressed with his sincerity, the depth of knowledge reflected in his questions, and his obvious desire to learn about what was going on in the banking sector and housing market from the frontline vantage point of the FDIC."
"It was such a contrast from the conversations with his senior economic team, where the attitude was that they already had all the answers and were talking to us only because the president wanted them to," she says.
Despite her reservations about Hamp, she was more committed to it after the discussion.
"If his strategy was to motivate me to help him achieve his foreclosure prevention goals, it worked," Bair writes. "As frustrated as I was with the arrogance of his economic advisers and their failure to even listen to any criticism of their programs' fundamental design flaws, I decided to do everything I could to try to make the programs work."