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Wednesday, October 21, 2009

Greenspan, Rubin, Summers, and the 'Warning' they blew off

Ten years too late, PBS's Frontline series has found a sympathetic hero - Brooksley Born, ex-head of the Commodities Futures Trading Commission - and three appropriate villains - ex-Fed chief and market ideologue Alan Greenspan, and ex-Clinton Treasury Secretaries Ron Rubin (ex-Goldman Sachs, later Citigroup) and Lawrence Summers (ex-Harvard president, now Obama's top economic adviser.)

"We didn't truly know the dangers of the market, because it was a dark market," Born tells Frontline in The Warning, produced by Michael Kirk. She wanted credit-default swaps (which brought down AIG) and other financial derivatives regulated, which might have limited damage from the home loan bond market freeze-up that sparked today's recession.

But "they were totally opposed to it," Born says.  In one scene, ex-Born aide Michael Greenberger recounts Born's verison of a phone call from "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... 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."
Posted by Joseph N. DiStefano @ 11:15 AM  Permalink | 2 comments
Comments   
  • 0 like this / 0 don't   •   Posted 12:36 PM, 10/21/2009
    The people that said there wasn't an internet bubble, housing bubble, credit bubble and told you that selling your Bear Stearns stock was crazy, still have jobs. write columns and dispense financial advice on TV and have jobs in the Obama administration.We have covered fraud up with more fraud and bad debts with more bad debts, nothing had been fixed or changed.More blow ups ahead
    — Tageman
  • Comment removed.


2 comments
About Joseph N. DiStefano
Joseph N. DiStefano writes this blog to feed his PhillyDeals column in the Philadelphia Inquirer. Joe has been a member of Bloomberg LP’s New York Finance Team, wrote the book “Comcasted,” taught writing at St. Joseph’s University, and studied economics and history at Penn. Reach Joe at 215-854-5194 and JoeD@phillynews.com
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