Is it me or does it seem like FDIC Chairwoman Sheila Bair is about the only person in Washington who gets it. Just the other day, we saw her fighting Tim Geithner’s bumbling plan back in mid-2007 to let banks set their own capital levels.

Yesterday she called for the FDIC to be empowered to close down institutions that are “too big to fail.” Why her agency? Because it’s already set up to do the dirty work.

As opposed to Geithner, Paulson, Summers, Bernanke, and the like, Bair actually wants to force shareholders and unsecured debtholders in insolvent banks to get wiped out, a stance so obviously right that it ought not even be in question. The NYT on B2:

Ms. Bair said that the concept of “too big to fail” should be “tossed into the dustbin” in favor of a resolution program that would clean up the balance sheets of insolvent institutions so they can reorganize as better capitalized companies. The notion of too big to fail “has contributed to unprecedented government intervention into private companies,” she said.

“Taxpayers should not be called on to foot the bill to support nonviable institutions because there is no orderly process for resolving them,” she said.

The Times throws in a nice context graph on the scale of the bailouts, too, something it and other seem to finally be catching up to Bloomberg on (emphasis mine):

So far, the federal government has committed to spend $12.8 trillion — which includes the bailouts of the insurance giant American International Group and the mortgage finance companies Fannie Mae and Freddie Mac — to resolve the credit crisis. As part of that, more than $90 billion has been spent to shore up Citigroup and Bank of America.

Speaking of Bloomberg, it’s good in explaining what Bair is getting at:

Bair recommended it be formed under a “good bank-bad bank” model, in which the government would take over troubled firms and force stockholders and unsecured creditors to pay the costs. “Viable” portions of the company would be put into the good bank, while the ailing portions would remain at the bad bank to be sold or closed over time, Bair said.

The costs imposed on the stockholders and unsecured creditors and fees collected from other “systemically risky” firms would pay for the bad bank, Bair said. “This has the benefit of quickly recognizing the losses in the firm and beginning the process of cleaning up the mess,” she said.

One sure way to know Bair is on the right track:

The American Bankers Association has challenged the idea of giving the authority to the FDIC, saying the agency’s mission would be jeopardized and banks may bear unnecessary costs.

As the Journal quotes Bair saying on its Real Time Economics blog:

“The stockholders and managers of some big banks might not like this process,” she said. “They might prefer a too-big-to-fail subsidy or investment from the government. (And some regulators might fear it because it would give an independent body the ability to close institutions for which they are responsible.)”

Alas, the news didn’t make the print edition of the WSJ. I tipped my hat to it last week for covering “too big to fail” prominently while others didn’t.

Hat-tipping today goes to Bloomberg, the FT, and the Times

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.