Behind the Meltdown and Bailouts Pt5

"We didn't truly know the dangers of the market, because it was a dark market," says Brooksley Born, the head of an obscure federal regulatory agency -- the Commodity Futures Trading Commission (CFTC). In the late 1990's she not only warned of the potential for economic meltdown, but also tried to convince the country's key economic power brokers to take actions that could have helped avert the crisis. In the devastating aftermath of economic meltdown, The Warning sifts through the ashes for clues about why it happened and examines critical moments when it might have gone much differently."They were totally opposed to it," Born says of her warning. "That puzzled me. What was it that was in this market that had to be hidden?"

The Warning unearths the hidden history of North America's worst financial crisis since the Great Depression. At the center, veteran PBS producer Michael Kirk (Inside the Meltdown) discovers Brooksley Born, who speaks for the first time on television about her failed campaign to regulate the secretive, multi-trillion-dollar derivatives market whose crash helped trigger the financial collapse in the fall of 2008.

"I didn't know Brooksley Born," says former SEC Chairman Arthur Levitt, a member of President Clinton's powerful Working Group on Financial Markets. "I was told that she was irascible, difficult, stubborn, unreasonable." Levitt explains how the other principals of the Working Group -- former Fed Chairman Alan Greenspan and former Treasury Secretary Robert Rubin -- convinced him that Born's attempt to regulate the risky derivatives market could lead to financial turmoil, a conclusion he now believes was "clearly a mistake."

Born's battle behind closed doors was epic, Kirk finds. The members of the President's Working Group vehemently opposed regulation -- especially when proposed by a Washington outsider like Born.

"I walk into Brooksley's office one day; the blood has drained from her face," says Michael Greenberger, a former top official at the CFTC who worked closely with Born. "She's hanging up the telephone; she says to me: 'That was [former Assistant Treasury Secretary] Larry Summers. He says, "You're going to cause the worst financial crisis since the end of World War II."... [He says he has] 13 bankers in his office who informed him of this. Stop, right away. No more.'"

Greenspan, Rubin and Summers ultimately prevailed on Congress to stop Born and limit future regulation of derivatives. "Born faced a formidable struggle pushing for regulation at a time when the stock market was booming," Kirk says. "Alan Greenspan was the maestro, and both parties in Washington were united in a belief that the markets would take care of themselves."

Now, with many of the same men who shut down Born in key positions in the Obama administration, The Warning reveals the complicated politics that led to this crisis and what it may say about current attempts to prevent the next one.

"It'll happen again if we don't take the appropriate steps," Born warns. "There will be significant financial downturns and disasters attributed to this regulatory gap over and over until we learn from experience."

Category:

News & Politics

Tags:

• Brooksley Born
• Alan Greenspan. Robert Rubin
• Washington
• Michael Greenberger
• Larry Summers

[ashlievideo]

Thank you for your comment, only those who watch can spread the word.

[bulbheadmyass]

This was extraordinary. Thank you for posting it. I hope everone watches the whole show.

[adriansrfr]

Deregulation that allows fraud is not capitalism, but Criminalism!!!

[exenrontexas]

@JayGatsbyOdysseus So true about the rationalization. I heard the worst corporate criminal in the history of mankind rationalize his fraud because it was good to the corporation in the short term. Enron preached Milton Friedman and Ayn Rand because they validated Enron's crimes. Enron cheated employees, taxpayers and their customers all for short term profits which boosted their bonuses.

[JayGatsbyOdysseus]

@exenrontexas I understand and I agree with you. I read Atlas Shrugged. I do not understand how supposedly intelligent people fall for Rand's bullshit. I guess the reason is they don't believe it to begin with. They just use her philosophy to justify their greed to others. Rand really lost me when she was writing about love. Dangny Taggart was sleeping with Hank Readen before she started sleeping with John Galt. Anyway, Rand wrote that a woman should only give her sex to the man for some

[exenrontexas]

@JayGatsbyOdysseus They believe that the world runs like the Fountainhead and Atlas Shrugged which are FICTION where Rand can predetermine the outcomes to fit her philosophy. In the real world, when people deregulate, honest hard working men loose fortunes when the deregulation crooks deceive them...like I did. Besides working for ENRON I worked for two large banks which failed under Reaganomics and one took the TARP bailout since they were "too big to fail".

[JayGatsbyOdysseus]

@exenrontexas I wish people understood this like you do. I hate being around stupid Ayn Rand desciples.

[exenrontexas]

NEVER forget that you were warned about the economic disasters that occur from DEREGULATION. Those who want you to deregulate want to steal your money or your neighbors money...even without you realizing it. I worked for the strongest advocate for deregulation who tried with BUSH's help to steal EIGHT BILLION from the CA energy market and who ended up stealing SIXTY EIGHT BILLION from my fellow employees and investors in...ENRON CORP which was the largest corporate fraud in the history of man.

[g777enn]

These men were shills put in by the powers that be to destroy the US economic system and make tremendous profits for the banksters.

[GSfreebooks]

Nice ! Worth the time. Faith and belief have no place in science. Economics has become the religion of unregulated thievery. Capitalism is a system in which society and government set the rules. The Market does not have a mind or morals. The Free Market is a total delusion created by people who think Ayn Rand is a deep thinker & not a hack writer. So the question becomes how do we de-program 40-50 years of MBAs & PhDs? Read Joseph P. Stiglitz's "Freefall" Economics, not Religion.

[BatusaiJack]

I don't know what to say anymore

[gordontuckerflash]

Greenspan stated know one could've seen it coming, but that is for the layman. Every one of these crooks not only saw it, but wanted it to happen.

[frugalite]

the little guy out of existence,it's human nature,we're greedy and want more at the expense of others.There needs to be strict rules on that,without that the system you call capitalism is doomed to fail again and again just like it upto now.