The amount of dollars and intangibility of credit default swaps and derivatives make my head swim. This Frontline episode is a compelling story of how Brooksley Born tried to warn about the dangers of unregulated hidden markets back in 1998. Politically, she ultimately lost to the triumvirate of Alan Greenspan, Robert Rubin, and Larry Summers, but sadly, she was ultimately vindicated in the financial collapse of fall 2008. Greenspan’s mea culpa in front of the congressional committee near the end of the documentary is shocking since so much trust was put in him by both political parties and the American public. I was greatly impressed by Brooksley Born’s strength and determination and although she lost her battle in Washington, it was good to read that she was awarded a 2009 John F. Kennedy Profiles in Courage Award. I personally believe markets and everything else in life can be over-regulated, but if we don’t pay heed to Born’s story and the lessons of the recent financial crisis, we’ll be doomed to repeat them, and the results may be worse in the future. Honestly, and the ending of the Frontline episode somewhat shares my opinion, I’m a little cynical substantial changes will be made to correct the lack of regulation of the black box markets.
http://www.pbs.org/wgbh/pages/frontline/warning/
