Tellingly, it was the FDIC, the American deposit insurance agency that oversaw medium and small American banks, that raised objections. The FDIC’s chair, Sheila Bair, an outspoken midwestern Republican appointee, was incredulous that big banks were effectively being given license to “set their own capital requirements.”48 It would give them a huge competitive advantage over their smaller competitors. The FDIC estimated that the introduction of Basel II would permit big banks to reduce their capital by 22 percent.
