We've talked a lot about Sheila Bair in the past few years.We've hosted her at New America. We've marveled at her plain-spokeness and clarity of vision. She hasn't always been listened to, and that's a shame, because she's been right more often than a lot of folks. She's also pushed the FDIC to do pioneering work on understanding the challenges of low-income Americans and to develop effective tools to help those that have the least (as highlighted by Ellen Lazar at our most recent event.)
She is finishing her term as the head of the FDIC and she has been collecting a round of plaudits on her way out the door, and deservedly so. It's hard to think of anyone who has worked harder to promote a healthy financial system, one that works for ordinary people, than she. Joe Nocera profiles her in the Sunday New York Times Magazine.
She also had a terrific op-ed in yesterday's Washington Post, the highlight for me:
Now that I’m stepping down, I want to sound the alarm again. The common thread running through all the causes of our economic tumult is a pervasive and persistent insistence on favoring the short term over the long term, impulse over patience. We overvalue the quick return on investment and unduly discount the long-term consequences of that decision-making.
Our decades-long infatuation with financing our spending through ever-growing debt, in the private and public sector alike, is the ultimate manifestation of short-term thinking. And that thinking, particularly in business and in government, is actually getting worse, not better, as we look for solutions to put our economy on a sounder footing.
Today, some want to repeal or water down key financial reforms, fearing that strengthening the rules for firms will curtail our recovery. But the history of crises makes clear that reforms will make our economy stronger in the long run.
While short-termism on Wall Street and in Washington was a huge driver of the most recent financial crisis, we all fall prey to this tendency to some extent.
Households have failed to save enough money to carry them through hard times or to achieve long-term goals. It became old-fashioned to save up for the down payment on that first home. Taking out a mortgage shifted from the most serious financial decision a family would make to a speculative bet on how far home prices would rise. Homeownership went from being a source of stability in our economy to a source of instability.
Business executives squeeze expenses of all types to meet their quarterly earnings targets, even cutting research and development that could create a competitive advantage down the road. This market failure leads to under-investment in projects with long payoff periods. “Patient capital” has become almost quaint.
And policymakers do everything they can to avoid acknowledging a problem or policy mistake, even as it grows more difficult and expensive to fix with each passing day.
That's a long quote, but darn if she isn't right. There's a lot more to her piece, and I recommend reading the whole thing. More than that I recommend following her advice. Work for the long-term. Push for a long-term focus from our politicians, our media, our businesses. The constant pressure of now, now, now has a significant downside. Millions of Americans are living it right now. We forget that, and we need to learn that lesson and be reminded of it in the future. Here's hoping that Sheila Bair keeps working to make people aware of that wherever she ends up in the future, but we'd better also hope that somewhere, not too far off, there are some more like her.