What Alan Greenspan Knew, and Brooksley’s ‘I Told You So’ Moment

What Alan Greenspan Knew, and Brooksley’s ‘I Told You So’ Moment

The Federal Reserve System MUST BE ABOLISHED!

“We at the board in 1998 were obviously aware of the nature of the problems.  Remember the Federal Reserve is a rule making, is not an enforcement agency.” – Alan Greenspan

Alan appears to have known exactly what was happening with Fannie, Freddie, and the subprime mortgages.  Just ask Brooksley Born.

From Frontline:

As head of the Commodity Futures Trading Commission [CFTC], Brooksley Born became alarmed by the lack of oversight of the secretive, multitrillion-dollar over-the-counter derivatives market. Her attempts to regulate derivatives ran into fierce resistance from then-Fed Chairman Alan Greenspan, then-Treasury Secretary Robert Rubin and then-Deputy Treasury Secretary Larry Summers, who prevailed upon Congress to stop Born and limit future regulation. This is the edited transcript of an interview conducted on Aug. 28, 2009.

Part 1 – The Warning:

The entire program online, here.

The plot thickens with Nancy Pelosi appointing Ms. Born to the Financial Crisis Inquiry Commission

Brooksley serve on financial crisis inquiry commission

Brooksley Born may have just gotten one of Washington’s greatest opportunities to say “I told you so.”

Born was the head of the Commodity Futures Trading Commission under President Bill Clinton in the late 1990s when she began to explore ways to regulate the derivatives market. She had grown concerned that derivatives represented a hidden dark side to the U.S. economy and that few people fully understood the risks involved. But her effort was quashed by then-Fed chief Alan Greenspan and then-Treasury Secretary Robert Rubin.

In wake of the crash of 2008, the vast, complicated and little-understood derivatives market has been widely blamed for undermining the American financial system — just as Born worried it could back in 1997.

But on Wednesday, House Speaker Nancy Pelosi (D-Calif.) announced that she’s appointing Born to the new 10-member Financial Crisis Inquiry Commission, a body established by Congress to serve as a sort of 9-11 Commission for the financial crisis.

In a news release announcing the appointment, Pelosi said the new commission will provide “a full explanation of why so many people lost their homes, their life’s savings and their hard-earned pensions.”

Pelosi said: “To avoid a financial crisis of this magnitude in the future, the commission will conduct a thorough, systematic and nonpartisan examination of the failures in both government and financial markets.”

The commission is to submit its report to Congress by Dec. 15, 2010.

Pelosi and Senate Majority Leader Harry Reid (D-Nev.) appointed former California State Treasurer Phil Angelides as chairman of the commission, along with four other members.

On the Republican side, House Minority Leader John Boehner (R-Ohio) and Senate Minority Leader Mitch McConnell (R-Ky.) appointed former House Ways and Means Committee Chairman Bill Thomas as vice chairman of the commission and three other members, including Doug Holtz-Eakin, the former economic policy director for Sen. John McCain’s 2008 presidential campaign.

Brooksley Born Takes On The Big Boys And We All Lose

Yesterday I checked in with Blue Sky Rising and found an excellent and concise post about the economic meltdown, and the amazing woman who was warning about it over a decade ago; Brooksley Born.  The six part Frontline special appears to have embedding issues so I have posted the series on Eyeblast.  I am sure you will find the story as riveting as I did, and will recognize the same names you are hearing today as the “great minds” fixing the current economic meltdown.  Please remember that the over-reaching has a boomerang effect; see NY-23.

From BlueSkyRising:

Frontline: The Warning

This is a must watch for all those who wonder what brought about the world’s greatest financial crisis. Over a decade ago, there were many warnings by experts, and regulators that major fraud was being committed on Wall Street that could result in a massive financial crisis. Greenspan, Rubin, and Summers made sure that the regulators were not allowed to enforce the laws that existed on the books to protect the American people from losing their life savings. The banks knew they could get away with fraud, and outright stealing so they expanded their treachery. This excellent Frontline episode is the story of the great regulator, Brooksley Born, and how she warned and tried to regulate the dangerous OTC (Over the Counter) derivatives market when it was revealed that massive fraud was being committed. ‘The Warning’ sheds light on the role Greenspan, Rubin and Summers played in not only controlling our Congress by strongarming them from heading Born’s warning, but also pushing Congress to enact laws that prevented her from regulating the OTC derivatives market altogether. Knowing that her hands were tied, she resigned her leadership of the agency soon after. This is yet another example of how this crisis could have been prevented by our Congress, but they did nothing to protect the American people from losing almost everything they ever worked for. Is there still any question who Congress works for?

“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?”

Part 1: The Go-Go 90’s

Part 2: Brooksley Born Arrives On The Scene

Part 3: Get This Lady Off Our Backs

Part 4: The Earthquake

Part 5: 1998 – Born’s Warning Becomes A Prophecy

Part 6: Late 2008 Born’s Nightmare Comes True

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