NEW YORK (TheStreet) - Sheila Bair, the former chair of the Federal Deposit Insurance Corp., will be joining the board of directors of Banco Santander (SAN), one of Europe's largest and worst performing financial institutions.
Whenever a high profile ex-regulator joins one of the institutions that might have fallen under their purview, it raises obvious questions about possible conflicts of interest or profiteering over a so-called "revolving door" between Washington regulatory circles and Wall Street. In fact, Bair, one of the most outspoken and independent regulatory minds through the financial crisis, has herself criticized an apparent revolving door.
And of course, one wonders whether Bair is taking a spin for herself now that she will be joining the board of Banco Santander,which has 1.2 trillion euro in assets.
I would argue that such a reaction is simplistic, including the debate among journalists and financial-sector experts on Twitter. Consider that other ex-regulators have quietly taken on board seats at prominent financial institutions, in moves that are widely seen as a positive for the health of the banking system.
TheStreet profiled former Federal Reserve governor Susan Bies' appointment to Bank of America's (BAC) board of directors, and there may be similar benefits to Bair's appointment at Santander. Other examples include ex-FDIC head William Isaac's crisis-time appointment to the board of Fifth Third Bancorp (FITB).
Simply put, big banks need qualified, independent board members. No one with an understanding of Bair's career would accuse the former FDIC head as lacking either of those attributes. Banking conglomerates in Europe, meanwhile, have generally shown a need for more aggressive action in raising capital and Santander is a glaring example.