Yes, extremely gratifying, and right on the mark. The only thing I would have wished for, is that she could have followed up the ideological question by asking, “If your behavior was not based on your personal philosophy, in what respect would any of your actions have been any different?” Because, of course, the answer is, “In no respect.”

But she’s a WOMAN! What the hell does a WOMAN know about finance or even mathematics? /s

Good on BB.

Are you aware of eCAHN’s hosting of Book Salon this weekend?

I’m liking it. Maybe we’ll see a good catfight on the TV machine between BB and Mrs. Alan Greenspan. There’s your Class-A entertainment…

Born warned them all… and was shut up, shut out, and shut down…

Thanks for the ad! I’m just in to load another audio book disc on my ipod. It’s going to be in the 80s this afternoon & I’m on my last load of pick-up sticks (under the weeping willow that sheds like crazy) before it gets too hot to work outside.

Somebody finally got it right.

I wanna be the Designated Heckler. Heh…

Greenspan probably does stink as bad as his enemies are making him out to, but I personally speculate that he is being made the scapegoat for a lot of things that he can’t really be held accountable for, including the officials in and acts of presidential administrations and congresses, lobbyists and lobbying, etc.

Good on her for giving that self-important asshole a bit of comeuppance. She is dead right on every count. Of course, in the parallel history of Texas history textbooks, he will still be the savior of the economy.

BTW, I did an email on it. Don’t think I have yours, so if you’d like to get it, you can email me at rosannecahn at aol dot com.

Brooksley Born is said to have been on the short list for head of Justice but instead got kicked down to the Chicago Board. Let’s admit that Clinton may have had an inkling Born was too independent, too smart, and too much the first class litigator to place her where she might cause him grief. I like what I know of Born–immensely. But integrity can be a handicap in political circles. God bless her.

You’ll be up against a heavy hitter. Prof. Ludwig is very sharp and very charming. Not at all reluctant to clever retorts.

Born is the one bright spot in the FCIC but not enough to give it credibility.

The flaw in the system? One of the biggest flaws in the system was Alan Greenspan. Greenspan drove much of the financial side of the economy exactly where he wanted it, and it collapsed. This is not your run of the mill failure, or even a major clusterfuck. This is being one of the prime architects of the largest financial collapse in human history. What Greenspan did ruined the lives of tens of millions and will result in the deaths of untold thousands. The man is a major villain.

I didn’t do what is referred to as Fed watching when I was on Wall St., but there were tons of Fed watchers around me. I got the impression that Greenspan got everything he wanted and was influential in the executive branch as well. Under Volker & Greenspan, the Fed Chair came to be called the second most powerful man in the world. So even if he’s not responsible for every financial evil, he certain is at the top of the list.

Sounds like a cool dude…

I’m off, right after I type another kudoes to BB.

A pro. Last time I had to write something to pass muster with a college prof was about 3 decades ago. So I was nervous, but he put me at ease right away.

Yes, you have a point: he had lots of eager collaborators. “Too numerous to mention…” But he enthusiastically pushed his completely untested ideology and no one forced him to do that. I do find it curious that he was talking about raising interest rates and reducing the “irrational exuberance” just before the 2000 election, but after Bush’s coronation, he was persuaded to continue on course. Looked to me like an obsequious genuflection to the throne to keep his job.

LOL. Fact is, folks like me who live by the market know Born as one of the great minds out there who was righter than anybody else about the building dangers. She was ignored, of course, except when she was dissed. Today must have been so sweet for her. Maybe bittersweet, on second thought.

I agree Greenspan did not act alone. Much of what we see playing out now began under Reagan, and some of it even under Carter. So it isn’t just Greenspan but those who put him in a position of prominence and kept him there.

Parenthetically, Greenspan is responsible for the bogus Social Security “surpluses” in the 1983 Social Security reform. Knowing that, you can see how financial hucksterism was there throughout his career. Our elites certainly knew this, and valued it.

Maybe, but if so, he is a most deserving scapegoat. He gladly accepted the glory of godlike status. and used it to further the ends of his cronies, yet today he admits he was wrong 30% of the time, and claims that’s a great performance record. Would anyone have given him the cred he got over the last two decades based on a claim of 70% correctness?

he put me at ease right away.

Mark of a true professional.

Jane has a fresh cross-post already in progress: Progressive Caucus Outlines Their Plan To Give Coal Lobby Everything It Wants

Waiter!?

I’ll have the sweet revenge, served cold please.

And… no I’ll skip the humble pie for desert though, watching my weight.

Thank you.

Alan Greenspan was the head dude of the Boys’ Club and now that this club has ruined an aweful lot of people’s lives, he wants to distance himself from the outcome of his decisions. Let’s not forget Robert Rubin; he was another powerhouse that President Clinton looked to for advice. He needs to be held accountable for all of his decisions also. Rubin, like Greenspan couldn’t do enough to get the girl [Brooksley Born] out of Washington. She was brilliant and insightful. Too bad the boys just couldn’t handle a smart, no-nonsense woman. I am very happy that she is finally getting the acknowledgement she deserves. Out of all of the pivotal players in this financial mess, Mrs. Born is probably the only one who didn’t get a post-Washington finance job once she left government service.

There is a lot to be said for heeding the warnings of the canary in the mind, but the boys were deaf on this one! I guess when the rich and the lawyerly don’t understand fraud, anything can happen!

Type this into a Google search and see where this story has spread to, and where it HAS NOT:

“media blackout” + jp morgan

I honestly think it was less about her genitals than the fact that she was willing to challenge the “no regulation needed” ideology. She threatened to cost a lot of insiders a lot of money.

By boy’s club you mean ‘den of thieves’ right? I don’t see how it really matters whether she was a man or a woman. She was just the only one honest at the table.

Funny how many women have warned about the current financial debacle and were not listened to. Remember when Summers was warned about Harvard losing millions and millions by endowment manager, Iris Mack. In the end Harvard lost 1.8 billion. And Obama looks to this guy for expertise?

Shoot, I could have told ‘em and I am just a little old lady living near Sacramento.

Don’t forget that while he was playing Oracle to the *&^%ing hilt, Greenspan once famously said: “If you think you understood what I was saying, you weren’t listening.” On Capitol Hill, I believe.

People used to hang on his every word, reading the tea leaves or rat droppings.

He was so full of shit and now everyone knows it. And finally to say, as Greenspan has, that he was indeed wrong about the model he was using. I guess it’s fine when he says it while people are fawning … not so ok when the *upstart* woman says so in public.

Brooksley deserves her opportunity to shine. I hope she gets more opportunities.

Me? I am just about done working with men at all. It’s 2010, and I keep running into assholes who think they can ignore a woman EVEN when she has a key role (assigned by an alpha male no less) on the team.

Present male FDL company excepted, of course.

It’s worth remembering that Wendy Gramm has the same kind of genitals as Born, but nobody ever got in her way, because she had the “right” attitude toward deregulation.

oh, and Summers fired Mack.

I think it does matter. If BB were a man he probably wouldn’t have had the balls to chanllenge the system. Heh, heh, I love it when this happens.

The first sentence of Chapter 2 of The Federal Reserve Purposes and Functions is:

2 Monetary Policy and the Economy
The Federal Reserve sets the nation’s monetary policy to promote the objectives of maximum employment, stable prices, and moderate long-term interest rates.

Thom Hartmann has mentioned these quotes on his show and recently I read his book, Threshold, where it was written:

“…as Alan Greenspan frankly told the Wall Street Journal in 1989, his job as Fed chairman was to maintain a certain minimum level of “worker insecurity” so there wouldn’t be “wage inflation” – income increases among the middle class.”

and

… front page Jan. 27, 1997, the newspaper that represents the voice of what it calls the “investor class” [The Wall Street Journal] pointed out how former Federal Reserve chairman Alan Greenspan saw one of his main responsibilities as maintaining a high enough level of worker insecurity that employees wouldn’t demand pay raises or benefit increases: “Workers’ fear of losing their jobs restrains them from seeking the pay raises that usually crop up when employers have trouble finding people to hire. Even if the economy didn’t slow down as he expected, he told Fed colleagues… he saw little danger of a sudden upturn in wages and prices. ‘Because workers are more worried about their own job security and their marketability if forced to change jobs, they are apparently accepting smaller increases in their compensation at any given level of labor-market tightness,’ Mr. Greenspan told Congress at that time.”

So Greenspan was basically working against the stated purpose of the Fed, which is to provide “maximum employment” where he was saying he thought “worker insecurity” was a good thing. Greenspan was not acting alone – he had presidents (starting with Reagan and including Clinton, Greenspan’s “favorite Republican president”) and congress who obviously went along with this, otherwise he would have been replaced.

But why is no one talking about “maximum employment” as part of the Fed’s mandate??? And one of its obvious failures?

I applaud Ms. Born and her willingness to excoriate this vile little pissant. But what the hell is the purpose of this Financial Crisis Inquiry Commission? No one has been or will they ever be held acountable. Nor will anything ever change. There’s too much money involved for such a select group of influential, powerful people.

A colossal waste of time unless a bunch of people do a bunch of prison time.

People can watch the Financial Crisis Inquiry Commission Live:

C-span 2 – watch live

or read transcripts here:

FCIC inquiry transcripts

There will be inquiries on the 7th, 8th and 9th.

Unfortunately I can’t run it down now, but during Bernanke’s reconfirmation period the usual suspects among economic columnists and bloggers —pretty sure you can find things at least from Baker, DeLong, Krugman, Reich, Thoma along these lines, and with more foreboding as the hearings went on with Ben not seeming responsive— did express concern that the Fed acted as if its mandate was solely over inflation. A lot of them cooled whatever their endorsement level was because of it.

But you know, the big job there belonged to Congress, whose mandate it supposedly is under the Humphrey-Hawkins Act.

Thank you for that interesting comment and question that should be raised. What does the Fed “believe” is their mandate?

For more info on how Brooksley Born tried to raise warning flags for years, watch the Frontline show – The Warning:

Frontline – “The Warning”

Greenspan accords a certain degree of respect on Capitol Hill, despite Born’s accurate take on his many failures, and so this outburst was highly unusual – and gratifying.

i’m guessing you haven’t listened to (or read the transcripts) from previous hearings with born and greenspan? very entertaining, and all i did was read them. here’s a bit from 1998 readers might like:

Mr. GREENSPAN. I might add that I happen to agree with the Under Secretary, but we ought to make certain that Brooksley Born gets three times the time that any of the three of us get, because this is scarcely an even balance, if I may point out.

I am concerned that we are dealing with a situation which reminds me of the emergence of the Eurodollar market many, many decades ago, which essentially occurred as a result of a regulatory action on the part of the United States, and set up the beginnings of a market abroad which, once it got started, it didn’t turn around.

So what my concern would be is that if we essentially create an exodus of derivative activities from the United States, I think it will be exceptionally difficult to get them back, no matter what we do. And it may well be that this concept letter is merely raising hypothetical issues, but if somebody says to me, I’m contemplating punching you in the nose, I don’t presume that that is a wholly neutral statement. My inclination is to pack up and move to another neighborhood.

Ms. BORN. If I my just add, I think what we are saying is, in——

Mr. LAFALCE. You don’t intend to punch Dr. Greenspan in the nose, do you, Ms. Born?

Ms. BORN. It is more correctly stated, do you think you need a punch in the nose? That is the question that is being asked.

Mr. GREENSPAN. I will yield to your interpretation.

Mr. HAWKE. I would say that the implication is that if the answer to that question is yes, then the Commission has said it has the full authority to administer that punch.

Mr. HINCHEY. I remember as a new member of the State Legislative Banking Committee in Albany seeing how some very large banks took the opportunity during the New York City financial crisis, when the city was about to go into bankruptcy, to sell city instruments to unsuspecting customers, and I think that is at the heart of questions that are being raised here with regard to these instruments. Is it possible that somebody could be hurt.

Now, Ms. Born raised the issue of Orange County and Procter & Gamble, and if the Chairman would allow me another few seconds, I would ask you, Ms. Born, who was hurt by the Procter & Gamble situation? Who lost money? A lot of money changed hands in that situation.

Ms. BORN. It was the shareholders, and with respect to Orange County, it was the taxpayers of Orange County whose money was lost. These are pension funds that are being invested in these markets. These are insurance funds that are being invested in these markets. These are mutual funds that at this point most of us have some interest in.

Mr. HINCHEY. In other words, in many cases the life savings of ordinary people?

Ms. BORN. Exactly.

Mr. HINCHEY. Which are increasingly being placed in jeopardy, and they have nothing to say about the manner in which that is being done and they have no one to turn to to represent their interests in these particular transactions; is that an accurate statement?

Ms. BORN. Yes.

for the curious, lots more at the link.

The “dual mandate” is inherently self-contradictory, and can’t be honestly fulfilled. Gotta go one way or the other, and everyone in the know understands that. Just as they understand that the one way the Fed will always go is in the direction that shows concern about inflation. I’m sure it’s just a coincidence that inflation is the thing you really worry about if you happen to be somebody who already owns a lot of money.

The only exception I know to this rule of Fed behavior is when rates are kept artificially low to force suckers into the stock market (early 1990′s),or to facilitate the creation of a bubble (housing in the early 2000′s, and stocks probably now), and of course those activities also favor the already-rich who know how to profit in those arenas.

And to think Bubba found Born to be “boring”. Hmm.

According to the affluent around my neck of the woods, the banks were forced to hand out subprime loans by the government, by congress.

Nice to see that someone sees thru his Bullshit

and actually calls him to account

A colossal waste of time unless a bunch of people do a bunch of prison time.

But wait, wouldn’t that require an investigation followed by indictments?

If anyone is working on those scant items, they’re sure doing it out of sight …

My friend? He’ll have a large helping of Hubris.

They’re looking forward, not backward. (eye roll)

From the Update III – BBC link in article, Alan Greenspan stated the following:

“It was the global proliferation of securitised US sub-prime mortgages that was the immediate trigger of the current crisis,” he said in a written statement submitted to the Financial Crisis Inquiry Commission (FCIC).

So, this should answer the question of whether our policies and regulations or lack thereof, effect the global economy. I am wondering if the United States will lose a significant amount of credibility regarding the financial sector with our on-going denial regarding the need for better regulations (especially by the banks).

They won’t under the new doctrine of Changeyness (aka: Look forward not backward).

Which completely ignores the fact that all crimes are in the past.

I do believe you owe me a drink?

Until we have not only investigations but also indictments regarding the wars and the financial crisis, the citizens of this country will either begin or continue to lose any belief in our “system” of government and democracy in general. At the heart of the matter, there will be an on-going erosion of “democracy”.

fyi, from newsweek, dec 2008:

As far back as 1990, Stiglitz argued in a paper (it can be found on The Economist’s Voice Web site at http://www.bppress.com) against securitizing mortgages and selling them because “when banks retained the mortgages which they issued, they had greater incentives to screen loan applicants.” He asked, again with startling prescience: “Has securitization been a result of more efficient transactions technologies, or an unfounded reduction in concern about the importance of screening loan applicants?”

we lost credibility in the ’90s in much of asia and the former soviet union (’70s and ’80s in central and south america). old news, but apparently we’re just about the last to know.

Brooksley born called out Greenspan, Rubin, Summers (yes Larry) in the 90′s as well as Arthur Leavitt. She didn’t understand how a 50 trillion unregulated derivatives market was in the best interest of the US. They pretty much told her not to worry her pretty little head about it. Those boys then fixed her wagon and ruined her career in DC. I’ve read the derivative market is now at least 700 trillion (GDP of the US is 60 trillion)

Greenspan actually told her at that time that he didn’t believe in financial regulation for fraud. She was right then and Leavitt (to my knowledge) is the only one of these people who has admitted he should have listened to her. The Oracle (the God) fucked up and can’t admit it. Summers is still Obama’s economic adviser. Greenspan was and is a self absorbed asshole. Maybe John Galt has an answer for him. Who is John Galt? Who fucking cares.

Smack him down Brooksley.

And pretty cute for a little old lady from Sacramento.

I tried your link to the Economists Voice and it didn’t work. It should be http:www.bepress.com/ev/

The Economists Voice

Thanks for this new source of info though.

“The flaw in the system I acknowledged was an ability to fully understand the state of potential risks that were fully untested…”

Weasel words. The system didn’t lack the ability to understand; you did.

Did Alan Greenspan believe there were “risks”? After all, he was and is an Ayn Rand, laissez faire capitalist. Therefore, he must have believed that the “free market” would correct any “potential risks”.

It’s nice to see this, and other examples, of Born’s smackdowns. Sadly, she’s been sidelined by the Boys Club (as noted in other posts). If Bubba found Born “boring,” then it’s because she didn’t cha-cha in front of him and make sexy-time looks at him. And so: double good for Born.

As great as this is, I suspect it’ll do not very much in terms of correctly the “record” and paving the way for appropriate regulations to deal effectively with such fiscal shenanigans and financial irresponsibilites and irregularities. Too many people made huge bucks out of this shit, so Greenspan may get a tap on the wrist at most. So???

Too bad.

Go Brooksley Born! Nice to see some truth told for a change. Can’t hurt. Never know; might help.

For anyone who believes that President Obama will truly push for regulatory reforms, they might want to read this article by Naomi Klein in June 2008:

Beware of Chicago Boys

major blush.

The reason Greenspan is accorded respect is because his only purpose in life was to make money for Wall Street slime. Support for the deregulation of derivatives in the late nineties is his crowning achievement. The only person in government who got in his way, and that of Robert Rubin and Lawrence Summers, was Born.

I still remember like it was yesterday Obama’s presser during the Lehman debacle…Obama excoriating Walls Street on behalf of Main Street (his words) with Rubin and Summers shifty eyed by his side, serious looking as all get out. Wall Street theatre for the rubes.

Is there video of Born’s remarks?

look over at c-span.org

Did you all see the Frontline special, The Warning? Most excelent. Really sets the stage between her and Greenspan.

http://www.pbs.org/wgbh/pages/frontline/warning/view/

Born starts questions around 11 minute mark.

http://www.c-spanvideo.org/program/id/222134

must see tv

I’ve read the derivative market is now at least 700 trillion (GDP of the US is 60 trillion)

GDP of the US is $12 to 14 trillion at present.

GDP of the world is about $60 trillion.

Current estimates of shadow market (CDOs, CDS, you name it) is $600 to 1200 trillion.

If the Martians came and offered us a “fair price” for the world it would be about $200 trillion.

Bill Clinton was reported to have admitted he should have listened. Kinda late, babe.

They understand fraud. They also understand where their money comes from and there’s substantial overlap.

Glad to see everyone here has already heard of Ms. Born. She became a hero of mine after that Frontline episode. As a woman in a male dom industry, I could totally see what was going on, and it was infuriating.

I only have one thing to say to Andrea Mitchell’s hubby:

70% is a C minus average. How about you share some of your wealth with those of us who earned at least a B+ average, only to watch as our retirement money swirled down the drain due to your reckless policies??

Thanks for the link!

Ms. Born was too nice. Mr. Greenspan (for lack of a better way to phrase it) is a lying piece of shit. The Fed under Greenspan was a complete political monster. Under Clinton, first he warned about the Federal annual debt, then warned about the Federal annual surplus when Clinton fixed the budget. Under Bush, he kept saying the economy and the Federal debt were just fine while the economy was inflating the biggest bubble EVER on a stack of outright fraudulent loans, and the Federal debt was DOUBLED.

You are correct about the 60 trillion and I presume correct about the rest. I suffered a geriatric moment.

If you are wrong 30% of the time, and that 30% represents a major contribution to an economy which HAS collapsed for many of the citizens (losing homes and jobs), then does the 70% of the time which you “supposedly” did “good” things really even matter at that point? Former Federal Reserve Alan Greenspan and his “ideas” are a failure.

No problem! The first time everyone sees the shear size of these numbers it’s shocking. How could the financial masters of the universe have created an estimated $600 to $1200 trillion dollars of “equity” (or whatever the hell you call it) out of thin air? But it’s easy to see how they make a profit, just skim a fraction of a percent off of the $600 trillion whirling ball of shit, and you can make a lot of real money.

Here’s some other shockers:

How much have we spent bailing out banksters? (Hint: TARP is the tip of the iceberg)

Last estimate 10.2 trillion: (This amount would have bought every bad home loan a couple of times over.)

http://www.nomiprins.com/bailout.html

How long did it take us to spend it?

Less than one year.

I listened to the NPR story this evening and they played a clip of Greenspan laying this all at the feet of Freddie mac that over bought these securities to carry out a congressional mandate to make housing affordable to minorities! What a load of Dung. I would love to have a hard argument ready to pierce that balloon.

I suspect the entire panel and everyone in the room knows of her relationship with Gspan. Therefore, they know he is full of shit for the answers he gave her. She didn’t have to be overbearing with him, just bring up what she had already confronted him on a decade ago. Born has a strong relationship with Sheila Bair too. Summers, Geithner et al tried to bully Bair at the beginning of this admin. Bair is with Born on speaking about the OTC derivatives. Bair:

…One of the important causes of the current financial difficulties was the exploitation of the regulatory gaps that existed between banks and the non-bank shadow financial system, and the virtual non-existence of regulation of over-the-counter (OTC) derivative contracts. These gaps permitted lightly regulated or, in some cases, unregulated financial firms to engage in highly risky practices and offer toxic derivatives and other products that eventually infected the financial system…

Ah, thank you very much.

OK, I just watched it. This country would be in so much better shape now if Born had been running things instead of the extremist dimwit hack and Ayn Rand fetishist she was interviewing.

Bravo Brooksley Born!! Bravo!!! Alan Greenspan is a fraud. He hides behind extreme ideology and vague answers that no one understands and that leave room for significant latitude in listener interpretation (ie confusion), but that are word smithed to sound smart. The only reason he got away with it for so long is that nobody understood the nature, nor the specifics, of the items he was charged with being the gatekeeper for. And when that happens, people are more than willing to defer their power to someone who presents themselves as knowing what is going on, whether they do or not…Think Wizard of OZ type stuff. The guy and his coconspirators, Larry Summers and Robert Rubin are frauds. Not only did they jointly run Brooksley out of Washington, they also did not perform their jobs by protecting the economic system that they were the heads of, and notice how they accept no responsibility for the catastrophe like teflon mobsters. To make matters worse Rubin profited from the fiasco at CITIbank to the tune of millions of $’s after its collapse and Summer’s is on Obama’s National Economic Council. The leaders that got us into this mess have profited from it and are still in positions of significant influence! Is this the end of Democracy?

Brooksley Born is a personal hero of mine. She gave the Chairman exactly what he deserved and she did it with so much class, that unless you knew the nature of their previous relationship, you never even knew what was really happening. Go Brooksley. Today, she got a shot at Rubin who apparently is now singing her song…. amazing how deferential he was to her. Love to see her take on Mr. Sumners although I don’t believe he is worth her time.

How is it that Andrea Mitchell can hold her ‘lofty’ position at NBC when she is attached to the ‘Troll of the FRB’??

If there’s a derivatives law section at the American Bar Association, it should have an annual Brooksley Born award.