A 1-In-100 Blogger: Financial Collapse and 'The Warning'

Saturday, October 24, 2009

Financial Collapse and 'The Warning'

In reference to a PBS special on Frontline, called The Warning, Brooksley Born was the chairman of the Commodity Future Trading Commission in the Clinton administration. She not only warned of the potential for economic meltdown in the late 1990’s, but also tried to convince the country’s key economic powerbrokers to take actions that could have helped avert the crisis. Here’s a quote from Brooksley Born:

"We didn't truly know the dangers of the market, because it was a dark market. They were totally opposed to it. That puzzled me. What was it that was in this market that had to be hidden?"

The hidden history of the nation's worst financial crisis since the Great Depression is revealed; and at the center of it all is Brooksley Born, and her failed campaign to regulate the secretive, multitrillion-dollar derivatives market whose crash helped trigger the financial collapse in the fall of 2008. The Warning shows exactly what happened with the derivatives, and how Born (she’s also a Democrat) knew as far back as 1997 that there was going to be a financial collapse, and she tried to warn everyone about it.

Former SEC Chairman Arthur Levitt, a member of President Clinton's powerful 'Working Group' on Financial Markets, he said, "I didn't know Brooksley Born. I was told that she was irascible, difficult, stubborn, unreasonable." He explained how the other principals of the Working Group convinced him that Born's attempt to regulate the risky derivatives market could somehow lead to financial turmoil, a conclusion he now believes was "clearly a mistake."

Born's battle behind closed doors was apparently "epic." However, despite her attempts to warn those with power to make the right call, the members of the president's Working Group vehemently opposed regulation – especially when proposed by a Washington outsider like Born. Michael Greenberger, a former top official at the CFTC who worked closely with Born, said this:

"I walk into Brooksley's office one day; the blood has drained from her face. 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.'"

She was ultimately blocked by Rubin, Greenspan, Larry Summers, and others who were with the president's Working Group at that time. They hammered Brooksley Born until she gave up. She was in hearings before Congress explaining that there's going to be a major collapse if these derivatives aren't banished, and instead of getting a less risky market, the president's Working Gourp crushed her career for it. Ironically, a 25 year old Geithner was involved in the Working Group at that time. Just as ridiculous, Summers is still presently in the White House, too. Many of the same people and organizations that helped cause the financial meltdown just so happen to be in key positions in the Obama administration.

The federal government created policies that forced banks to make bad loans to people who couldn't pay them - "toxic debt," I believe is the term used today. That's what the subprime mortgage crisis is all about. And these people in government, many of whom are still in power today, they were all warned about the problems that they themselves created. But they ignored the warning. And now they're working with the Obama administration as the "heroes" as having the "solution" to the problem. Everybody hop on the Geithner plane, he says it might work out OK this time.

Even ACORN is involved! The Association of Community Organizations for Reform Now was given extraordinary power in the late nineties with Clinton, Barney Frank and Chris Dodd, and they went around and forced the banks to make bad loans after making them a federal law. Banks were forced to make bad loans that led to today's financial disaster; and these banks, after following orders, the irony is that they are now being blamed for the financial problems today by the very people who were warned about the inevitable problem and actually created it themselves in the first place.

Considering many of the same men who shut down Born are now also in key positions in the Obama administration, what's Born's latest warning? Brooksley Born now warns, over and over,

"It'll happen again if we don't take the appropriate steps. There will be significant financial downturns and disasters attributed to this regulatory gap over and over until we learn from experience."

Related Reading:
RushLimbaugh.com has Rush Limbaugh's take on The Warning, included in the linked article is the full hour-long video of the PBS special on Frontline.

Obama a super hero? Think again. A follow up to this series will be written in the future, once things unfold a bit more.

Performance and timeline of Stock Market calls by Jim Cramer, includes Barney Frank's ridiculous agenda and attempt to cover up Fannie and Freddie's woes - before they "woe'ed," per say.

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