Sheila Bair — A key player in the economic recovery, Sheila Bair is chairwoman of the Federal Deposit Insurance Corporation. The Independence, Kan., native has had a say in much of the federal government’s response to the financial crisis, recently suggesting the FDIC could ease rules for buying failed banks. Bair earned a bachelor’s degree in philosophy from KU in 1975 and a law degree in 1978.

The second-most powerful woman in the world — as ranked by Forbes magazine — is just like everybody else. She doesn’t know whether financial reform can win congressional approval either.

But Sheila Bair, a Kansas University alumna and chair of the Federal Deposit Insurance Corp., told a Dole Institute of Politics crowd of about 300 people on Monday that reform definitely should happen.

“It is not rocket science. Document income. Get a pay stub. See if they have paid bills before,” Bair said of simple tasks many of the country’s largest financial institutions were not doing before issuing risky loans. “Make sure they have some money down. Make sure they have some skin in the game.”

But Bair, whose organization oversees community banks but does not oversee many of the large “shadow banks” that played a major role in the financial crisis, said reform was an uncertain prospect at the moment.

“The good news is that the economy may be coming back. We all hope it is,” Bair said. “But I worry the party could start up again if we don’t put some better regulation in place.”

Bair — who was appointed by George W. Bush in 2006 to a five-year term at the FDIC — is supporting much of President Barack Obama’s financial reform proposal being hailed by supporters as the end of the “too big to fail” concept that the government adopted in the most recent credit crisis.

Bair has been lobbying for all financial institutions — everybody from investment banks to mortgage brokers — to come under the same type of regulatory control that FDIC-insured banks must adhere to currently. That would include tougher lending standards and more ability for the government to take over a failing institution and quickly sell its marketable assets to other good banks.

Opponents to the administration’s reform proposal have argued it will make it more likely that the federal government will become involved in costly financial bailouts in the future. But there wasn’t much of that talk among the Dole Institute crowd Monday. Bair drew praise from audience members as being a common-sense Kansan in the center of the crisis, and even won points for being a philosophy major at KU before going on to receive her law degree at the university.

“Thank God she didn’t take the opium of the people, which is called economics,” said Mohamed El-Hodiri, a professor of economics at KU. “She took philosophy instead, and law, which cares about evidence and doesn’t just live in a dream or fantasy world.”

The near-capacity crowd attracted large numbers of bankers as well.

“I heard her speak a couple of years before this all started breaking, and I thought she was the only one who had any real thoughts about what the problem was and wasn’t afraid to address it ,” said Pat Slabaugh, executive vice president with Douglas County Bank.

Other tidbits from her talk included:

• A call for greater regulation of complicated credit default swaps that allowed speculators to make big bets that bundles of mortgages would default, even though those speculators held no financial stake in the mortgages.

“I can’t take out fire insurance on your house because it gives me an incentive to burn down your house,” Bair said.

• A plea for students and future business leaders to adopt a new attitude on how to make money.

“Money is something important to all of us, but producing something of value, I think, is more important,” Bair said. “I think a lot of the large financial institutions lost sight of that. It is almost like compensation became divorced of providing something of value.”