Monday, February 22, 2010

A scathing PBS documentary investigates the role of Rubin, Summers and Greenspan in what ended up to be America's worst financial crisis

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.'"

Please go to this link and read the commentary and watch the entire documentary. The worst thing of all is that Summers and Rubin (via his agents) are still at the controls!!


Mike Sandifer said...

Mike, I saw this documentary when it first aired. I can't imagine why anyone would want Summers or Rubin around.

Summers is a very bright guy and has written some interesting papers on macroeconomics, but he's been a terrible administrator whether at Treasury, at Harvard, or perhaps now as chief economic advisor.

And why does Obama ever send this guy on TV to explain and promote his economic policies? Can you think of a worse choice to speak to the average American? Geithner is almost as bad.

Rubin, well... Given his over-emphasis on deficits and budget surpluses in the 90s, his resistance to the regulation of these novel derivatives, and his role at CitiGroup, it is a wonder anyone in Washington talks to him at all.

These guys have not only been disasterous policy-wise, but also politically. What was Obama thinking?

mike norman said...

Mike, I agree with everything you just said.

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