By Patricia Sellers
December 3, 2008

“It started with housing. It will end with housing.”

– FDIC Chairman Sheila Bair this afternoon at the Fortune 500 Forum in Washington, D.C. Bair talked about the need for the federal government to deploy some of its billions to help reduce foreclosures. She hit a wall with her recent $24 billion loan-modification proposal (Treasury Secretary Hank Paulson, who spoke here yesterday, refused to divvy TARP bailout funds for that), but Bair hopes to make headway in the Obama administration. “It’s never too late,” she said, noting that mortgage distress will likely last until 2010. Though her FDIC job, technically, is about assuring that bank customers don’t lose a dime on their deposits (and indeed, since the FDIC’s creation in 1933, they never have), the crux of the current crisis happens to be housing, so Bair has made herself protector-in-chief of the American homeowner too. “Until we get foreclosures under control, I do not see the light at the end of the tunnel,” she said. “The housing market has to find its bottom.”

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