Sheila Bair, former head of the Federal Deposit Insurance Corp., recounts the time she was approached by a fellow airline passenger who joked that the FDIC must be short on cash for her to fly coach.
“No, we have plenty of money,” she told the man on the flight to Phoenix in 2009. “Your deposits are safe, and I always ride coach.” Retelling the story in her book, “Bull by the Horns,” she said that “movies showing senior government officials in first class and private planes are la-la land.”
On domestic flights, as Bair noted in the book, she and other regulators fly coach. When traveling overseas, on the other hand, some regulators do ride at the front of the plane.
According to federal travel records obtained through public records requests, Bair and former Comptroller of the Currency John Walsh stood out among 13 independent regulators for booking premium seats on overseas flights.
Bair and Walsh spent an average of more than $8,000 on a round-trip business class ticket each time they flew to Switzerland for meetings on international banking in 2011. On similar flights to Switzerland, Federal Trade Commission Chairman Jon Leibowitz paid $1,700 in coach, and Food & Drug Administration Commissioner Margaret Hamburg paid $1,781.
Bloomberg reporters in June filed requests under the Freedom of Information Act for records on taxpayer-supported travel in fiscal year 2011 for the top officers at 57 Cabinet departments and major government agencies. Only eight agencies complied within the legally required 20-day deadline. Six months after the filings, 38 out of 57 agencies had disclosed the travel records.
The regular trips to Switzerland by Bair and Walsh were required by their involvement with the Basel Committee on Banking Supervision as the organization hatched global capital rules for banks in the wake of the 2008 financial crisis.
Bair, who took 14 trips overseas between the start of 2009 and her departure in 2011 — all of them in business class — took advantage of an exemption from agency rules. Although the FDIC’s travel policy directs agency employees to fly coach for trips to Basel, board members are excluded from the rule for flights over six hours, according to Andrew Gray, an FDIC spokesman. All board member travel expenses are audited before they’re paid, Gray said.
Bair, who left the FDIC when her term expired in July 2011 and is now head of a group of former regulators, lawmakers and business people called the Systemic Risk Council, declined to comment. Walsh, now at McKinsey & Co., declined through a spokesman to comment.
The Office of the Comptroller of the Currency, an independent bureau of the Treasury Department, follows Treasury rules that require coach tickets unless the travel exceeds 14 hours — longer than the flight to Basel.
Walsh, who stepped down earlier this year after Thomas Curry was confirmed as Comptroller, cited a security exemption in choosing to travel business class, according to Bryan Hubbard, an agency spokesman.
“While not ideal, business class cabin seating arrangements typically allow for greater privacy and information security when the Comptroller finds it necessary to review sensitive but unclassified, non-public information,” Ron Bell, OCC’s assistant director for critical infrastructure protection and security, said in an internal memo dated Oct. 19, 2011. The memo backed up Walsh’s request for premium seats, saying they were “in the best interest of the government.”
Not all financial regulators selected higher-end seating on flights to Europe. On a November 2010 trip to London and Paris, and again on a March 2011 trip to London, former Securities and Exchange Commission chairman Mary Schapiro traveled coach.
“The agency generally pays for business-class travel only when the duration of travel is 14 hours or more, and Chairman Schapiro has followed that policy,” John Nester, an SEC spokesman, said in an e-mail.
Another financial regulator, National Credit Union Administration Chairman Debbie Matz, flew coach internationally, too. Agency records show she spent $1,379 roundtrip to attend a July 2011 credit-union conference in Glasgow, Scotland. John Fairbanks, an NCUA spokesman, said the agency only permits employees to fly business class when other seats aren’t available or on trips exceeding 14 hours, including layovers.
“One of our goals, as an agency, is to constantly work to keep expenses at a reasonable level,” Matz said in an e-mailed statement. “People expect us to practice what we preach.”