The federal response to the financial crisis was “too skewed” to favor bankers on Wall Street instead of families on main street, according to former federal bank regulator Sheila Bair.

“I think we were too skewed in our efforts towards stabilizing big Wall Street firms and not so much on Main Street,” Bair said. “We still need to do a lot of work there.”

Bair, who served as head of the Federal Deposit Insurance Corporation from June 2006 to July 2011, witnessed the 2008 financial crisis firsthand and took on an important role in the subsequent efforts to recover from it. Shortly after the crisis, the FDIC she headed moved to take over 25 failed banks. Blair, however, didn’t always agree with the other key players in the administration, especially her colleagueTreasury Secretary Timothy Geithner, when it came to the bailouts of banks termed “too big to fail.” 

“I think we should have imposed more accountability,” she said. “Sure, we had to step in and do something. But why couldn't we have required bond holders to take a little bit of a haircut?” Bair suggested. “They couldn't take 10%? You know, they had to be paid off at par.”

Bair’s criticism of Geithner did not end with his handling of the bank bailouts. She also leveled criticism of his negotiation skills when responding to the fact that the Obama administration had recently tapped him to be the lead negotiator for the White House on the fiscal cliff talks.

“I don't think this is Tim's strong suit. I think Tim was given the job of Treasury Secretary because he understood the banking system and he -- the President wanted to make sure we had continued progress to banking stability, so that was really why Tim was put there,” Bair, Geithner’s former colleague, said. “He's not a budget guy, he's not a tax guy, he's never really worked in this sphere. And I think somebody like Erskine Bowles, who has stature on the Hill, can work with both sides of the aisle, who has strong … years of credentials in this type of area would be a very good pick to be the new Treasury Secretary.”

Bair, who was singular in her efforts in 2007 to stem the tidal wave of homeforeclosures before they took place, also spoke out about the government’s failure to alleviate the housing crisis for middle class families, and in turn, its contribution to the growing disparity in wealth in the United States.

“For main street families, most of their wealth is in their house, and once they lose the equity in their house, they lose their wealth. You know wealth -- income disparities, but wealth disparities too – are as bad as they’ve almost ever been in this country right now, and that’s because of the combination of bailout policies and monetary policies.”

Sheila Bair is now Senior Adviser to the Pew Charitable Trusts where she continues to monitor and encourage regulatory reform as Chair of the Systemic Risk Council alongside Former Senator Chuck Hagel and Former Treasury Secretary Paul O’Neill. For more from Sheila Bair watch the full PRESS Pass above.