"This myth of all these people making sophisticated calculations and trying to game the system, that wasn't it," Ms. Bair says of the event [on avoiding foreclosure] hosted by California Gov. Arnold Schwarzenegger. "These were just regular people, working families trying to hold onto their homes. They were scared and I saw a lot of fear on their faces, and I think that struck me more than anything."
Ms. Bair is optimistic that the U.S. will emerge from the current morass stronger than it was just a few years ago. Institutions and consumers were overleveraged, she says, and the current crisis should usher in a new era of "wise and prudent consumption" and a focus on the "basic notion of thrift." "Getting back to basics, saving before you buy, thinking through expenditures, and not getting too deep into debt," Ms. Bair says. "We need to get back in touch with those cultural values."