Born pushed for regulation of the derivatives market during the Clinton administration, but was told to put stop. This all happened during the Clinton administration. Washington Post had an in depth article about how it was stopped and by whom in the Clinton administration.
You can stream Frontline http://www.pbs.org/wgbh/pages/frontline/view/ PBS is frigging amazing, some of the shows they've done over the years have just been tremendous..
cont on link.... http://economicsofcontempt.blogspot.com/2009/05/brooksley-born.html --------------------- The Post dubs her "the Cassandra of the credit crisis" because of her infamous showdown with Alan Greenspan and Bob Rubin over the OTC derivatives markets in 1998. So was she, in fact, the Cassandra of the credit crisis? Yes and no. My answer is partly "no" for the same reason I thought back in 1998 that the reaction of the industry and (especially) the other regulators was appalling: there was, and still is, a widespread misunderstanding of Born's actions. The conventional wisdom is that Born proposed regulations for OTC derivatives, and was quickly smacked down by the market-worshipping Greenspan and Rubin. That's only half right. It's true that Greenspan and Rubin quickly and publicly smacked Born down, but she never proposed any regulations on OTC derivatives. Born issued a "concept release," which merely asked questions about the OTC derivatives markets. The concept release didn't propose even one regulation, and actually went to great lengths to emphasize that it wasn't proposing any regulations. Despite this, Robert Kuttner recently wrote that "Born distributed for comment a proposed regulation that would have required greater supervision of these so called over-the-counter derivatives." Alan Blinder even went so far as to suggest that he disagreed with Born's non-existent regulatory proposal, writing in his NYT column that "while [Born's] specific plan may not have been ideal, does anyone doubt that the financial turmoil would have been less severe if derivatives trading had acquired a zookeeper a decade ago?" The concept release essentially asked the financial industry for its analysis of the costs/benefits of a broad range of regulatory approaches to OTC derivatives. For some reason, the entire financial industry flipped out. Just look at how much the concept release bent over backwards to emphasize that it was purely informational, and should not be interpreted as a regulatory proposal: The Commission urges commenters to analyze the benefits and burdens of any potential regulatory modifications in light of current market realities. The Commission has no preconceived result in mind. The Commission is open both to evidence in support of easing current restrictions and evidence indicating a need for additional safeguards. The Commission also welcomes comment on the extent to which certain matters are being or can be adequately addressed through self-regulation, either alone or in conjunction with some level of government oversight, or through the regulatory efforts of other government agencies. Sound the alarms! Seriously though, we had clients calling the firm all week long flipping out about the concept releaseâwhich they usually referred to as "the new OTC derivatives regulations." They were allegedly concerned about the legal status of existing OTC derivatives, even though the concept release clearly stated that any new regulations would be "applied prospectively only," and that: This release in no way alters the current status of any instrument or transaction under the Commodity Exchange Act. All currently applicable exemptions, interpretations, and policy statements issued by the Commission regarding OTC derivatives products remain in effect, and market participants may continue to rely upon them. The way that Greenspan, Rubin, Arthur Levitt, and Larry Summers treated Born was particularly appalling. As regulators, they should have immediately realized how benign and non-threatening Born's concept release was. And even if they had substantive disagreements with her, they should never have aired those disagreements in public. The whole thing reeked of sexism. The reason Born was partly the "Cassandra of the credit crisis" is that she warned about exactly the situation the Fed and Treasury found themselves in with AIG. Born's major concern was that regulators had no information about the enormous OTC derivatives markets, and so it was possible that regulators wouldn't be able to see a financial crisis coming. (As chairman of the Fed, which is charged with protecting the "safety and soundness" of the system, Greenspan should have been thanking Born for doing his job for him.) The Fed was caught completely off-guard by AIG's collapse, and, consequently, they literally had less than 24 hours to decide whether to bail AIG out. So it's indisputable that Born was right. I don't think it's completely accurate to say, "if we had listened to Born in 1998, we wouldn't be in this mess," becauseâand I think Born would agree about thisâshe never actually proposed any regulations that would have prevented any of the actions that contributed to the crisis. Her whole point was that regulators didn't know anything about the OTC derivatives markets. If Born had been given full access to information on the OTC derivatives markets, there's no guarantee that she, or any other regulator who had access to the information, would have made the right regulatory decisions. On the other hand, she clearly demonstrated an ability to think about systemic risks and possible preventative steps, so it's not totally crazy to think that she would have seen the crisis coming and taken appropriate action. cont on link.... http://economicsofcontempt.blogspot.com/2009/05/brooksley-born.html
Which would have been a good thing. Remember that the Republicans controlled both houses of Congress at this time and that Dick Army essentially authored the Commodity Futures Modernization Act. But Clinton was not much of Democrat. When Kudlow says that from a financial policy prospective Clinton was Regean's third and fourth term, he was not far wrong. Clinton managed to raise the marginal tax rate slightly, balance the budget and broke up Ma Bell, but guts to b break up Goldman, Lehman, and the Morgans? Not so much. Perot might have done it, because it needed to be done, but he got that call in the middle of the night. Self organizing systems without regulations tend to a power law distribution of size of businesses because those who have the gold write the rules. This is why we have antitrust legislation (which is somehow never used) Money naturally falls up until only a very few have almost all the money and all the power. Prevention of a heredity aristocracy was why the founding fathers outlawed fee tail and enacted inheritance taxes.
Legislative History The ÂgCommodity Futures Modernization Act of 2000ÂÂ [H.R. 5660 was introduced in the House on Dec. 14, 2000 by Rep. Thomas Ewing [R-IL] and cosponsered by Rep. Tom Bliley [R-VA] Rep. Larry Combest [R-TX] Rep. John LaFalce [D-NY] Rep. James Leach [R-IA] [1] and never debated in the House. The companion bill [S.3283] was introduced in the Senate on Dec. 15th, 2000 by Sen. Richard Lugar [R-IN] and cosponsored by Sen. Peter Fitzgerald [R-IL] Sen. Phil Gramm [R-TX] Sen. Charles Hagel [R-NE] Sen. Thomas Harkin [D-IA] Sen. Tim Johnson [D-SD] [2] and never debated in the Senate. http://cambridgeforecast.wordpress....futures-modernization-act-of-2000-phil-gramm/ ----------------------------------------------------------------------------------- The real beginning is here. And look "NEVER DEBATED IN THE HOUSE" "NEVER DEBATED IN THE SENATE"
"FRONTLINE is closed-captioned for deaf and hard-of-hearing ........" What do they do for the stupid, and paid off viewers?
Covered many times here and elsewhere. http://www.elitetrader.com/vb/showthread.php?s=&postid=2145656&highlight=phil+gramm#post2145656