Good riddance, Chairman Bair.

After five years, Sheila Bair will depart in July from her post as chairman of the Federal Deposit Insurance Corp. Her time at the FDIC was turbulent and challenging, just as it was for two of her predecessors, William Isaac and William Seidman, who served during the previous banking crises, in the 1980s and early 1990s. During that crisis, as in the most recent one, the FDIC exhausted its insurance fund. Today it remains an estimated $7 billion in the hole, based on the most recent data available.

During Bair’s tenure, which began in June 2006, the FDIC did some things well and other things poorly.

On the positive side, the FDIC did relatively well in its core function of passing failed banks back to the private sector, a discrete power the FDIC has wielded since its founding nearly 80 years ago. In contrast, the recent FDIC bailouts were a different story and will define Bair’s legacy.

Based on our research, the FDIC and its chair were ill-prepared to implement the so-called “systemic risk” provision of the Federal Deposit Insurance Corp. Improvement Act (FDICIA) of 1991. Congress intended this provision to address “too big to fail” institutions, such as Continental Illinois National Bank and Trust Co., which nearly failed in 1984. The FDIC was to use this power only in the direst of circumstances, and was to fully document its rationale to ensure transparency.

Initially, Bair resisted efforts by Timothy Geithner, then president of the Federal Reserve Bank of New York, to bail out “too big to fail” institutions, such as Washington Mutual Bank, which was seized by the Office of Thrift Supervision in September 2008 and placed in FDIC receivership. Ultimately, Bair won that argument.

But she later relented and led her board in invoking the systemic risk provision to bail out numerous other banks--including Wachovia,

Citigroup and Bank of America--and creating a broad-based FDIC debt-guarantee program that primarily benefited large banks.

Traditionally, the FDIC has been a transparent agency. But no more. That’s a major part of Bair’s legacy—and the reason we have spent the past two years in two separate Freedom of Information Act lawsuits trying to compel the FDIC to disclose the details of precisely why it approved those bailouts.

The FDIC has fought us every step of the way and continues to do so. In a judicial opinion last December, Judge Emmett G. Sullivan of the U.S. District Court of the District of Columbia verbally spanked the FDIC for its lack of transparency in responding to our requests, referring to the FDIC’s arguments against disclosure as “baseless,” and sending the requests back to the FDIC for proper response. The FDIC responded by saying the search they conducted was sufficient and they were not compelled to search further. We contested that and it is now before the judge again.

Our litigation, combined with the investigative work of the Financial Crisis Inquiry Commission, uncovered meeting minutes and internal memos revealing that the Bair-led FDIC gave no clear indication why they voted for the bailouts, other than a vague notion that they had to do “something.”

Bair admits that she “acquiesced” to the politically driven Treasury Department, which was “vigorously pushing” the Wachovia bailout, she says—despite the fact that the FDIC supposedly is an independent agency insulated from political pressure.

The more substantive documentation obtained from the FDIC on the proposed Wachovia bailout was a mix of general statements about the troubled U.S. economy, combined with speculation about the possible fallout from a large bank failure. Supporting information on the subsequent bailout of Citigroup just a few weeks later was even flimsier. When questioned about the bailout of still another supposedly “too big to fail” institution by the Special Inspector General of the Troubled Asset Relief Program (TARP), Bair admitted that her agency was all but clueless: “We were told by the New York Fed that problems would occur in the global markets if Citi were to fail. We didn’t have our own information to verify this statement, so I didn’t want to dispute that with them.”

After the FDIC’s string of bailout votes, and before the details of many of these transactions were disclosed, the Dodd-Frank legislation (the so-called Wall Street Reform and Consumer Protection Act) was hurriedly passed. The legislation granted the FDIC additional powers, including the extraordinary power to liquidate systemically important non-bank institutions. The lobbying campaign, led by Chairman Bair, involved a heavy critique of the U.S. Bankruptcy Court that handled the 2008 Lehman Brothers Lehman Brothers bankruptcy, with the FDIC claiming that its past experience had made it better prepared to liquidate a large financial services firm such as Lehman than the bankruptcy court.

To top off the power grab, just weeks ago—on April 18—the FDIC issued a report on the Lehman failure that is nothing short of delusional. The report, which is a bizarre cross between time travel and a fantasy baseball game, claims that: 1) if Dodd-Frank had been in place back in 2008 and 2009, the FDIC would have resolved Lehman Brothers instead of the bankruptcy court; 2) the FDIC would have intervened much earlier than September 2008; and 3)the FDIC would have succeeded in getting Lehman Brothers’ general creditors 97 cents on the dollar instead of the roughly 20 cents they are expected to get via the bankruptcy process.

Instead of trying to rewrite history, FDIC staff time could have been used more effectively searching for and releasing internal documents that would explain FDIC’s views on bailouts and the doctrine of “too big to fail.”

As she steps down from the FDIC chairmanship after a turbulent five years, Bair has said that the type of bailout she repeatedly voted for “should be prohibited” in the future and that Dodd-Frank gives the FDIC “the tools to end Too Big to Fail and eliminate future bailouts.”

The real question is why, given the lack of evidence to support the FDIC bailouts, didn’t Chairman Bair apply such tough talk when it mattered most: voting against the Wachovia, Citigroup, and Bank of America bailouts and the debt-guarantee program?