Just in case you aren’t incensed enough by tales of the Reverse Robin Hoods right now in Washington D.C., access Frontline’s latest documentary, The Warning, to grasp just how long our economic train wreck was warned about and that warning willfully fought and ignored, even after a near meltdown over ten years ago.

My jaw never left the floor as Frontline unfolded Brooksley Born’s noble but futile fight in the late 1990s for fiscal sanity in America against the ferocious, deregulation-loving Titans of Wall Street led by Alan Greenspan and his primary disciples, Robert Rubin (and his disciple, a young Timothy Geitner) and Larry Summers. Greenspan, an advocate of Ayn Rand’s laissez faire philosophy of governance, had been given free rein during five presidential administrations. He and his free market, high-flying cronies would not abide any challenge to the long-cultivated bountiful status quo by an uppity female securities law enforcer.


In 1996 Brooksley Born was appointed chairman of the Commodity Futures Trading Commission, a small, obscure, bureaucratic agency charged with monitoring agriculture futures and arcane financial instruments known as derivatives. Born had been a strong, successful, conscientious securities attorney and — oh yes — had an apparently RARE capacity to recognize right from wrong, bull markets notwithstanding.

Born had become a chum of Hillary Clinton when Bill Clinton was governor of Arkansas. When Clinton was elected President, Born was put on the short list for Attorney General. Frontline discloses a rumor that, upon being interviewed, Bill Clinton dismissed her as “boring.” The chair position was considered her consolation prize.

During an introduction lunch as guest of guru Greenspan, Chairman of the Federal Reserve, Born was stunned to discover his “absolutist” (Born’s word) disdain for “regulation”. In so many words, Greenspan advised her not to fret about any occurrences of fraud since, after all, the market would take care of the “fraudsters” by self-regulating itself. Government must detach and let the sacred market operate in freedom. Fortunately, Born had had plenty of experience with fraudsters as a securities attorney and was immune to Greenspan’s intimidation and mystification powers when it came to economic philosophy. She had been top of her class at Stanford and President of the Stanford Law Review. The first female in both positions.

Soon after becoming Chairman of the CFTC, Born began to lose sleep from her growing awareness of the massive scope and recklessness of a new lucrative market called over-the-counter derivatives or “swaps” (bets between companies and banks). It was nicknamed the “black box” by Wall Street. Only the parties in the deal knew what was happening. It was a $27 trillion secret market at that point (now a $45 trillion one and growing). No transparency. No registering with an exchange, no one but the parties involved acquainted with the terms and scope of the loans. No official paper trail. The only detailed records were buried within the filing cabinets of the immediate players. Plenty of room for fraud. And the tremendous amounts of funds involved were capable of crashing the entire global market.

Thanks to a law suit filed by Procter & Gamble against Bankers Trust, Brooksley got a good look at how P&G had been fleeced out of millions due to this complicated derivatives market. There was evidence of audio-taped Bankers Trust brokers blatantly revealing their intention to fleece the company. “This is a wet dream” one employee exclaimed on tape. There was much celebratory chuckling over the successful “set up” of P&G as victim.

Born recognized the immediate need for government regulation of the banks to rein in what Nader has called “casino capitalism.” To accomplish this she would have to do battle with the ferocious and hubristic deregulation-loving presidential palace patriarchs, who continued to ride high on the bull market harvests of the “go go” 90s, beloved by the national media. In 1998, Greenspan had just reassured an obsequious Congress that all was well, that the economy was the greatest he had ever seen. He was celebrating the unstoppable rewards of unfettered capitalism.

To Greenspan and his disciples, Brooksley Born was suddenly the proverbial mouse that roared. The Beltway Titans unleashed immediate condescension and wrath upon her. How dare this uppity, small fry, female fish in their fraud-friendly, group-think, kool-aid sea challenge the wildly lucrative deregulated system! To the well-heeled but amoral political and corporate cronied classes the ends totally justified whatever means. The bull market was a sign that all was perfect with the booming economy. This dangerous obstructionist woman was to be punished and silenced.

Upon Born’s determination to arrange regulation for the derivatives market, Robert Rubin unleashed his enforcer, Larry Summers, on her. Summers accused Born of being about to trigger the greatest financial crisis since the end of WWII. He blasted her on the phone from his office which he revealed was filled with 13 enraged bankers.

God bless Born. She was all the more certain that something was VERY rotten in the District of Columbia. She pressed on with her plans. Rubin accused her of not having the authority to do so. She absolutely and legally had such authority. She was not accountable to him. The only way the power-playing financial fraternity could stop her was turning to Congress and the media to induce legislation and public opinion to disempower her. That is what they did, recruiting Arthur Levitt of the SEC to join in on the pile on.

Matt Taibbi, in passages from his heralded Goldman Sachs exposé (later highlighted by Jason Linkins), explains and unfolds the travesty well:


There was only one problem with the deals: All of the wheeling and dealing represented exactly the kind of dangerous speculation that federal regulators are supposed to rein in. Derivatives like CDOs and credit swaps had already caused a series of serious financial calamities: Procter & Gamble and Gibson Greetings both lost fortunes, and Orange County, California, was forced to default in 1994. A report that year by the Government Accountability Office recommended that such financial instruments be tightly regulated — and in 1998, the head of the Commodity Futures Trading Commission, a woman named Brooksley Born, agreed. That May, she circulated a letter to business leaders and the Clinton administration suggesting that banks be required to provide greater disclosure in derivatives trades, and maintain reserves to cushion against losses.

More regulation wasn’t exactly what Goldman had in mind. “The banks go crazy — they want it stopped,” says Michael Greenberger, who worked for Born as director of trading and markets at the CFTC and is now a law professor at the University of Maryland. “Greenspan, Summers, Rubin and [SEC chief Arthur] Levitt want it stopped.”

Clinton’s reigning economic foursome — “especially Rubin,” according to Greenberger — called Born in for a meeting and pleaded their case. She refused to back down, however, and continued to push for more regulation of the derivatives. Then, in June 1998, Rubin went public to denounce her move, eventually recommending that Congress strip the CFTC of its regulatory authority.

Taibbi, goes on … [take a deep breath] … and … wait for it:

In 2000, on its last day in session, Congress passed the now-notorious Commodity Futures Modernization Act, which had been inserted into an 11,000-page spending bill at the last minute, with almost no debate on the floor of the Senate. Banks were now free to trade default swaps with impunity.

Born had faced down four hostile Congressional committees, with high profile, vilifying economic superstars discounting her. She was clear. She was calm. She was brave. She was right. When one hostile Congressional Committee rep sarcastically demanded to know what she thought she was doing, she quietly asserted, “We’re trying to protect the money of the American public which is at risk in these [derivatives] markets.”

Okay, one more time. She said, “We’re trying to protect the money of the American public that is at risk in these markets.” That was in 1998. Over 10 years ago. Congress, of course, over-bribed and over-trusting of the financial fraternity, went with the boys, dismissed her dire predictions, and then went off to summer recess.

Six weeks later, a hedge fund called LTCN, run by former Salomon genius John Meriwether, began to meltdown, causing quiet panic worldwide. Born’s dire predictions had already begun to play out. The crisis was ultimately averted when Fed Chair Greenspan convinced 14 of the biggest banks to rescue the LTCN hedge fund with $3.5 billion a piece.

Was this a sobering lesson to vindicate Born in the eyes of the corporate and political fraternal order and to finally reconsider serious regulation and reform? Nope. Greenspan dismissed the crisis to his ever-enthralled Congress, helped by 5 financial lobbyists per representative, as an anomaly. Again, emphasizing that the real threat to the economy was from Brooksley Born. The messenger who must be “killed”. It would seem the smarter the messenger, the more industrial strength the status quo koolaid.

Thanks to Ronald Reagan’s super successful anti-regulation indoctrination, the Wall Street elite was placated by Clinton and the Congress over a decade ago, in such similar ways as the placation by Obama and the present Congress. In fact, some of the very same Goldman Sachs power playing insiders are still in the game.

So instead of regulation, the bank-lobby-loving Congress gutted the power of Born’s department. Born resigned and returned to private practice in Washington, D.C., knowing full well what was coming down the pike to disenfranchise and destroy the quality of life of millions of citizens. She had done all she could do.

Just like a decade later, in this post-TARP climate, narcissism, greed, hubris, self-aggrandizement prevailed. The welfare of the public was not even on the priorities list. The in-your-face self-indulgence of the haves doomed the lives of the have nots. And now, with “moral hazard” behavior encouraged, whereby investment corporations too large to fail realize they will be protected no matter what further risks they take, the market Born strove to rein in is now all the more reckless and dangerous.

As for those mighty, celebrity, financial fools-for-fraud? Where are they now? Arthur Levitt, former Chair of the SEC, seems the only one making public amends to Ms. Born.

Alan Greenspan retired one year before the 2007 financial meltdown, returned for a hearing to Congress to admit that perhaps his 40-year philosophy, what he earmestly applied to his 18 years of steering the Fed, had “a … er … ahem … flaw.” How impressed were the media and the power players that heard such a brave admission from the great Mr. Greenspan! Poor, vulnerable, clay-footed Alan? What about the situation of the bottom 99% of a struggling America?

Robert Rubin, legendary Goldman Sachs alumnus, upon leaving his powerful role in the Clinton administration went to work for Citibank, which incidentally, is NOW receiving $100 billion of the bailout money. $100 billion!

Larry Summers? According to “middleagedwomanblogging”:


Larry Summers, of the “Good Ole Boy” fame, is now one of Obama’s top economic advisers. Summers pocketed over $5 million last year from one of the biggest hedge funds in the world along with another cool $2.7 million for speeches delivered to Wall Street firms who have received government bailout money. Robert Rubin and Timothy Geithner, now United States Secretary of the Treasury who formerly worked under Summers and Rubin, are still very much in the mix.

Yes, lets all give Larry Summers enormous pots of money to lecture us on economics. Granted, Larry Summers is said to be finally talking the talk of regulation. But walkless talking seems to be the MO with this administration. And what an even tougher sale it is today to an even deafer Congress to stand up for the common good. Do a bank lobbied, campaign financed administration and Congress have the political will to seriously regulate?

The stranglehood of the financial lobby on Congress, 5 reported lobbyists per representative, is not unlike the stranglehold of the health care lobby on them. Does regulation of the infamous credit default swaps have the same snowball’s-chance-in-hell as Congress’ embracing of the fiscal not to mention moral sanity of Single Payer Medicare for All? Or of Congress’ and the President’s public-entreatied mandate to end the wars in the Middle East?

I suppose the curbing of a few obscene executive salaries is the crumb the betrayed citizenry is being tossed. Did you notice that the same week that we all heard about the record-breaking Goldman profits and bonuses for the last quarter of this year, the state of Colorado lowered the minimum wage?

What we have here, folks, is “taxation without representation.” Big time. We are so not represented in terms of financial, health care, and military decisions. No wonder at the end of his capitalism movie, Michael Moore runs around Wall Street encircling entire blocks with yellow, crime scene tape.

As for Barack Obama, what can we make of his rewarding, promoting and embracing the very same, long-term engineers of the worst financial crisis since the Depression? The men who snatched catastrophe from the jaws of Brooksley Born’s rescue of our economy over a decade ago.

With all that has happened, are there signs of serious accountability? Justice for all?

No, just in-your-face, salt-in-the-wound, surreal support and promotion for the members and/or operatives of the Robber Class. Change? To be believed in? No change – and, for anyone with a moral imagination, not to be believed!

Thank you for trying, Ms. Born. Thank you for spreading this history, Frontline.

FWIW, Nancy Pelosi is appointing the oh-so-not-boring-but-heroic Brooksley Born to the Financial Crisis Inquiry Commission. May her wisdom be heeded.

Just don’t hold your breath waiting.