By Jim Carey
This is a story about a woman and a betrayal by President Bill Clinton which eventually led to the 2008 economic collapse. Front and center is Brooksley Born, first in her class—first female editor of the Stanford Law Review—who speaks about her failed campaign during Bill Clinton’s administration to regulate the secretive, multi-trillion-dollar derivatives market whose crash helped trigger the 2008 meltdown.
Meeting and Film
Occupy SMA presents:
Mon, Mar 13, 1pm
Quinta Loreto Hotel
Loreto 15, Centro
Then former SEC Chairman Arthur Levitt, a member of President Clinton’s powerful Working Group on Financial Markets, is told by Alan Greenspan and Robert Rubin that “Born is irascible, difficult, stubborn, and unreasonable.” They convince Levitt that Born’s attempt to regulate the risky derivatives market could lead to financial turmoil—a conclusion he now believes was “clearly a mistake.”
Larry Summers told Born, “You’re going to cause the worst financial crisis since the end of
World War II…Stop, right away. No more.” Greenspan, Rubin, and Summers ultimately prevail.
Greenspan, the maestro, and both parties in Washington were united in a belief that the markets would take care of themselves. We saw how that worked in 2008.
In a more recent interview, Born tells the story of when she was named to head the Commodity Futures Trading Commission in 1996 and invited to lunch by Federal Reserve chairman Alan Greenspan. After Greenspan spent time probing their differences, he said: “Well, Brooksley, I guess you and I will never agree about fraud.”
“What is there not to agree on?” Born replied.
“Well, you probably will always believe there should be laws against fraud, and I don’t think there is any need for a law against fraud.” Greenspan believed the markets needed no regulations. Those same Goldman Sachs types are now in charge.
According to Business Financial Services editor M. Dakers: “Warren Buffett issued a fresh warning (last May 2016) that the complex derivatives lurking on banks’ balance sheets are a “potential time bomb that could explode in times of stress….The contracts traded between private parties in the world’s derivatives markets were worth, according to the Bank of International Settlements, a notional $553 trillion in the first half of 2015, down from $710 trillion in 2013.” In 2008, the taxpayers bailed out the banks. The cost to the world economy was $14 trillion. Under the new rules, we are told that the depositors will bear the brunt of the next crash.
The Warning gives us a glimpse into the complicated politics that led to the last economic crisis. It’s a riveting story which should awaken all taxpayers—if they really know what is happening in the DC/Wall Street gambling bubble. All the more reason for every citizen to get involved locally with IndivisibleGuide.com.
Born gets the last word: “It’ll happen again if we don’t take the appropriate steps. There will be significant financial downturns and disasters attributed to this regulatory gap over and over until we learn from experience.”
Our events are free and always followed by a discussion.