Frontline did a re-broadcast of this episode last night. I watched it again and was even more angry at Greenspan, Rubin & Summers (and Clinton) than the first time. Still without words that Obama has chosen the architects of regulatory failure to run the show in his administration. Summers should be a night-shift janitor at Wellesley.
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Broadcast October 20, 2009...complete 55-minute video is above and two shorter youtube clips are at the bottom of this post.
PBS Frontline: Brooksley Born, Larry Summers, Alan Greenspan and Robert Rubin
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"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] -- who not only warned of the potential for economic meltdown in the late 1990s, but also tried to convince the country's key economic powerbrokers to take actions that could have helped avert the crisis. "They were totally opposed to it," Born says. "That puzzled me. What was it that was in this market that had to be hidden?"
In The Warning, veteran FRONTLINE producer Michael Kirk unearths the hidden history of the nation's worst financial crisis since the Great Depression. At the center of it all he finds Brooksley Born, who speaks for the first time on television about her failed campaign to regulate the secretive, multitrillion-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."
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http://www.pbs.org/frontline/warning/
In this clip from "The Warning," airing Tues, Oct. 20, FRONTLINE traces back to the Clinton Administration and the pro-business, anti-regulation powerbrokers Robert Rubin, Larry Summers, and the man referred to as "The Wizard," Chairman of the Federal Reserve Alan Greenspan (4:17).
http://www.pbs.org/frontline/warning/
In this clip from "The Warning," airing Tues, Oct. 20, FRONTLINE examines the long road that led Brooksley Born to her post as the chairperson of the federal regulatory agency Commodities Futures Trading Commission—a position that pit her directly against the president's pro-business, anti-regulation economic powerbrokers, including Chairman of the Federal Reserve Alan Greenspan.
In the devastating aftermath of the economic meltdown, FRONTLINE sifts the ashes for clues about why it happened and examines critical moments when it might have gone much differently. Looking back into the 1990s, veteran FRONTLINE producer/director Michael Kirk ("Inside the Meltdown," "Breaking the Bank") discovers early warnings of the crash, reveals an intense battle among high-ranking members of the Clinton administration and uncovers a concerted effort not to regulate the emerging, highly complex and lucrative derivatives markets that would become the ticking time bomb within the American economy.
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