Sheila Bair's "Exit Interview"

``‘They should have let Bear Stearns fail," Sheila Bair said.'' -- This and more in this very interesting "reveal" of the internal workings of banking regulation in the context of the crisis. Definitely worth reading.

When Bair was shown [Obama's loan modification] plan, literally hours before it was announced by the president, she told them, "That's fine; I'm not going to speak out against this, but don't expect me to marry up to it either, because I don't think it will work." She told me: "They wanted my name and reputation on it."

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The second key issue for Bair has been dealing with the too-big-to-fail banks. Her distaste for the idea that the systemically important banks can never be allowed to fail is visceral. "I don't think regulators can adequately regulate these big banks," she told me. "We need market discipline. And if we don't have that, they're going to get us in trouble again."