Frontline: The Warning

This is the story of one woman who was the lone wolf in the financial world who tried to sound the alarm of the impending financial disaster. Her warning would make her an enemy of very powerful people who would attempt to shut her up and shut her down. Unfortunately, they would succeed.Brooksley Born who is appointed Chairperson of the Commodities Futures Trade Commission (CFTC). As chairman of the CFTC, Born was authorized to regulate agriculture futures and derivatives. The men she would go up against are Allan Greenspan, Chairman of the Federal Reserve, Robert Rubin, who served as Assistant to the President for Economic Policy under Bill Clinton, and Tim Geitner. Rubin's top deputy would be Harvard Economist, Larry Summers. Together they formed a powerful influence. When these men spoke, Government and Wall Stree listened.Over-the-counter derivatives soon get her attention for its lack of regulation. Derivatives, or swaps, are essentially insurance policies that companies enter into to protect themselves against unforeseen calamities. It is a twenty-seven trillion dollar market that was hidden from public view. In 1993 Proctor & Gamble sued Bankers' Trust for losses in the millions from swaps. Proctor & Gamble employees find secret tapes of conversations between Bankers' Trust representatives bragging how they played P & G knowing they would lose. The only way the Federal Trade Commission found out about the fraud was from the high profile lawsuit. The largest banks are operating in secret. There is no recordkeeping, reporting, or regulation of swaps and their failure could take down the entire financial system.Worried about an out-of-control financial instrument, Brooksley Born decides to attempt regulation by issuing a concept release. She will not only face the economic and banking titans, but also the most powerful lobby ever--the banking lobby. Their immediate push only heightens Born's suspicion, and she continues her regulatory action, which her agency is empowered to do. She is only answerable to the president. The "President's Working Group reacts. It consists of Greenspan, Geitner, Summers, Arthur Levitt, the SEC chairman, the head of the FTC, and other members picked by Rubin. Their intent is to browbeat Born into retracting her concept release, but she refuses.The Working Group gets both houses of Congress to hold meetings immediately in the Summer of 1998. The old boys' network led by Senator Phil Gramm believes the good old boys, and Born is battered by the hearings. With no support or political clout Congress does nothing, but it doesn't take long for her prophecy to develop. In fact, it takes only six weeks when a hedge fund called Long Term Capital Management (LTCM) starts to melt down, exactly what what worries Born. Members of Congress begin to call for regulation but Allan Greenspan has no intention of yielding, and Congress backs him up. There will be no regulation against fraud, no transparency, no capital reserve requirements, and no record of transactions. The only action Congress takes is against the CFTC. Congress imposes a regulatory freeze on the CFTC because Born is the bearer of bad news, and not viewed as a team player. Powerless, she resigns. Wall Street is left to regulate itself at Greenspan's urging, and the last two years of the Clinton administration turns out to be the heyday of the derivative. By 2007, the OTC derivatives market grows to $595,000,000,000,000--that's trillion. Almost ten years after the collapse of LTCM the worst crash since the Depression occurs.Robert Rubin eventually leaves government to join top management at Citibank. After the crash, the government gives the bank 100 billion to keep Citi afloat. Larry Summers and Tim Geitner have become Barack Obama's chief financial advisors. Allan Greenspan retires just before the crisis of 2006. He realizes that his life-long belief a self-regulating free market is flawed. Larry Summers now says that he is very much in favor of derivative regulation. The Treasury Dept. releases a proposal with some of the same ideas Born made more than a decade ago. The banking industry still opposes regulation. Without it, Brooksley Born a modern day Cassandra, predicts the same thing again in a different form until we learn from our experience. She epitomizes the meaning of public servant.The question remains, if Brooksley Born's prophecy was heeded, would a financial crisis had been averted? The answer is yes.Finally, the CFTC is still powerless as a watchdog agency for the public.This is a phenomenal account of what happened, and who is to blame for the financial crisis from which this country still reels. For anyone who wants to understand what happened, this will inform you in 60 minutes.Also recommended:PBS' website where the discussion of the financial crisis continues, and a timeline of deregulation over the decades is offered.Leopold, Les, "The Looting of America: How Wall Street's Game of Fantasy Finance Destroyed Our Jobs, Pensions, and Prosperity." Chelsea Green Publishing, White River, VT. 2009

Our so-called economic experts, like Federal Reserve Board chair Alan Greenspan, who should have foreseen the 2008 economic meltdown, claimed that the meltdown was unforeseeable.There is a great deal of evidence from other sources (e.g. Charles Ferguson's book Predator Nation), that there was nothing "accidental" about the crisis, and that it was in fact the result of criminal fraud among mortgage lenders, not factors beyond human control.Frontline mostly fails to bring out that other evidence. From this video, it's hard to tell whether Greenspan, economics advisor Larry Summers, and Treasury Secretary Robert Rubin were "merely" high-paid fools, or whether they were actively helping cover up the crimes that helped inflate the bubble.So why the 4 stars, when other sources are better? This video, as limited as it is, nonetheless shows what our top economic advisers were doing and saying in the early years of the crisis (the last 1990s). In particular, this shows that as the Commodities Futures Trading Commission (CFTC), headed by Brooksley Born, was trying to expose the "dark" markets for CDOs (Collateralized Debt Obligations), people like Greenspan, Summers, and Rubin actively sabotaged efforts not only to regulate the scammers, but even to gather and publish information that would have allowed investors to make better-informed decisions. Ultimately, they castrated the CFTC.Greenspan comes across as a religious fanatic who worships the libertarian "god" of free markets so blindly that he cannot accept any fact, no matter how obvious, that conflicts with what he wants to believe.Whether you believe Greenspan was a naive fool, or an active ally of the corporate criminal class, is up to you. But there's no doubt that he and Summers and Rubin helped gag the people who were warning about the coming crisis.

It was Brooksley Born who provided the warning, 10 years before it hit the fan! But Greenspan and friends knew better. It's a real shame that Larry Summers still has position and influence in the world. He should have been exiled for helping to put the world at such risk.

リージョンフリーで日本のDVDプレイヤーで視聴可能。全編英語。英語字幕なし。ブルックスリー・ボーン女史は証券専門のベテラン弁護士で、1996年にCFTC（商品先物取引委員会）委員長に就任する。OTCディリヴァティヴの世界の不透明ぶりを懸念して調査に入り、実態を知れば知るほどに戦慄する。かくして1998年にOTCディリヴァティヴ規制を提案するが、周囲から寄ってたかってタコ殴りにされ、翌年は退任に追い込まれる。金融ロビーは議員一人につき五人のロビイストを送りむワシントン史上最大のロビー勢力である。弱小官庁の提案などハエを潰すが如し。「消されたカサンドラ」であった女史なのだが、金融危機直後からその名が徐々に一般にも知られるようになり、昨年はケネディ財団から「勇者」賞を授与された。本作は女史を中心にした60分ドキュメンタリー。表紙におられる三人は栄華の絶頂期に「世界救済委員会」やら呼ばれた三人衆で、女史を潰すのに血道を上げた皆さん。グリーンスパンは顔を真っ赤にして怒り、ルービンは女史を無知だと鼻で笑い、サマーズは頭ごなしに女史を怒鳴りつけた。本当はアーサー・レヴィット元SEC委員長も加えて三悪人＋１なのだが、取材を拒否したお三人と違ってレヴィット氏は画面に登場して懺悔しておられる。関係者証言のみで見せる地味な演出のドキュメンタリーだったが、個人的には顔相占い的な面白さがあった。ある程度の年齢を超えれば人品は顔に出るもんだから顔は大事である。ボーン女史は女闘志みたいな人かしらんと思っていたら、上品でおっとりした感じの女性だった。三人衆ではキツネのルービンが一番悪いヤツに見える。ブルドッグのサマーズは傲慢ながら単純な人間に見える。グリーンスパンは悪人には見えない（私には）。彼は不思議な人である。