The Woman Who Was Silenced
Oct 12th, 2008 at 1:40 pm by Susie
For trying to prevent this financial crisis:
In 1997, Brooksley Born warned in congressional testimony that unregulated trading in derivatives could “threaten our regulated markets or, indeed, our economy without any federal agency knowing about it.” Born called for greater transparency — disclosure of trades and reserves as a buffer against losses.
Instead of heeding this oracle’s warnings, Greenspan, Rubin & Summers rushed to silence her. As the Times story reveals, Born’s wise warnings “incited fierce opposition” from Greenspan and Rubin who “concluded that merely discussing new rules threatened the derivatives market.” Greenspan deployed condescension and told Born she didn’t know what she doing and she’d cause a financial crisis. (A senior Commission director who worked with Born suggests that Greenspan and the guys didn’t like her independence. “Brooksley was this woman who was not playing tennis with these guys and not having lunch with these guys. There was a little bit of the feeling that this woman was not of Wall Street.”)
In early 1998, according to the Times story, one of the guys, Larry Summers, called Born to “chastise her for taking steps he said would lead to a financial crisis. But Born kept at it, unwilling to let arrogant men undermine her good judgment. But it got tougher out there. In June 1998, Greenspan, Rubin and the then head of the SEC, Arthur Levitt, Jr., called on Congress “to prevent Ms. Born from acting until more senior regulators developed their own recommendations.” (Levitt now says he regrets that decision.) Months later, the huge hedge fund Long Term Capital Management nearly collapsed — confirming some of Born’s warnings. (Bets on derivatives were a key reason.)
“Despite that event,” the Times reports, ” Congress (apparently as a result of Greenspan & Summer’s urging, influence-peddling and pressure) “froze” Born’s Commissions’ regulatory authority. The next year, Born left as head of the Commission. Born did not talk to the Times for their article.
Perhaps everyone has already noticed that the lords of the universe, whoever they happen to be at any particular moment, do not take kindly to be corrected.
By any one.
And the more wrong their ideas the more vigorously they resent correction, or even gentle admonishment.
Ms. Born majorly blew it twice:
1) She was right in public - and that’s very bad
2) She was female who was right in public. That is unforgivable.
I hope it has not escaped notice that 2 of the senior males who shut Ms. Born down are considered “liberals” - and are advising Obama? Believe me, it’s more important to the old boys, and all the men named are very old boys, never to admit an error, than it is to do the right thing for their fellow citizens and country.
The financial markets are sufficiently scary right now that even these men may be willing to entertain some new ideas. But that’s only temporary. As soon as things stabilize a bit, or even before, their belief in their own omnipotence and their unwillingness to listen to ideas other than their own will return stronger than ever.
Obviously, Born’s an elite, latte-swilling, arugala-munching egghead who shows her disdain of ‘Joe Sixpack’ by being right in her analysis. I hope, I pray, that the cold-shower economic collapse and the absolutely ludicrous finish of McSame’s ‘Bullshit Express’ is teh end of the conventional wisdom talking heads and maybe a little respect for people who actually know something rather than pulling an answer out of their ideological asses.