Brooksley Born on Frontline Tuesday

October 20, 2009

From PBS:

“We didn’t truly know the dangers of the market, because it was a dark market,” says Brooksley Born, the head of an obscure federal regulatory agency — the Commodity Futures Trading Commission (CFTC) — who not only warned of the potential for economic meltdown in the late 1990s, but also tried to convince the country’s key economic powerbrokers to take actions that could have helped avert the crisis. “They were totally opposed to it,” Born says. “That puzzled me. What was it that was in this market that had to be hidden?”

In The Warning, airing Tuesday, Oct. 20, 2009, at 9 P.M. ET on PBS, veteran FRONTLINE producer Michael Kirk unearths the hidden history of the nation’s worst financial crisis since the Great Depression. At the center of it all he finds Brooksley Born, who speaks for the first time on television about her failed campaign to regulate the secretive, multitrillion-dollar derivatives market whose crash helped trigger the financial collapse in the fall of 2008.

Born’s story is well-known, but it will be interesting to hear her tell it in her own words. If you can’t catch the show on PBS, it will be available online as well.

57 comments

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/

sounds like the Elizabeth Warren of the 90s; had not heard of her before.

Geniuses are underperformers TraderMark.

Posted by Casper | Report as abusive

Please make sure this gets to the public as it explained the FRAUD extremely well to most people that are wiling to learn and or would like to know what is really going on with the GOV. and the BS they have created!!!!!!!!!!!!!!!!!!

Posted by DJ | Report as abusive

ABC…CBS…CNN…Fox…MSNBC…NBC need to tell this story in Prime Time so the American Public knows the story behind the mess we are in today. If anything called for a truly independent investigation this does.

Posted by PCWarn | Report as abusive

alan greenspan was “distreesed” that he was wrong about the markets not needing regulation. when you have to gather your family together to tell them we must be out of our home at the end of the month, that’s distress. when your looking in a dumpster for your next meal, that is distressful.

Posted by mac | Report as abusive

Frontline tonight proves what we all now know. Greenspan, Ruben and Summers are arrogant ignorant slimeballs,

Posted by Dan | Report as abusive

Two things that should not be allowed to go together – GREED and ARROGANCE. GREED – no one wants the party to end even when everyone is intoxicated and all rational reasoning is tossed out the window. ARROGANCE – they think they are smarter than they really are and that there assumptions will always hold true.All it takes is one outlier and the whole theory upon which trillions of dollar (and fate of the global economy) rest implodes. History will repeat itself and next time we might actually get the financial equivalent of a China Syndrome.

Posted by GL | Report as abusive

I still find it amazing most Americans actually believe what they hear on regular uninformative news that is out there today. I found the Frontline piece on Brooksley Born fantastic and I have utmost admiration for her and others that actually care about our country, they are few and far between. The showboat politicians that are out there that run our country and our lives only care about their ratings and their next election.Thank you for sharing with us the importance of real public servents.

Posted by Richard Ryan | Report as abusive

Thank You! I just hope the our President was watching.

Posted by katherine gonzales | Report as abusive

P.S. This financial mess is far from being over. Does anyone know if Ms. Born is available to clean up this mess?

Posted by katherine gonzales | Report as abusive

There is a visual way to represent and clearly describe how to use even very complex things like derivatives, health care plans, bailout plans, etc., where millions of user situations and conditions exist.One sees what looks like a game board or a children’s hopscotch on which all solution “flow pattern” explanation can be seen and traced. The game rules are, luckily, very simple. Experience with FLIPP Explainers was gained over many years in a large company. The method was preferred by users over the usual text and graphic methods of explanation.Translation becomes far simpler.The web site has a quick one-page demonstration and many exhibits.DJC 10/21/09

Why CFTC still does not have the authority to regulate derivatives market? Brooksley Born warned that the current market situation lends itself to repeating of the 2008 financial crisis again. When our governments learn the lesson?

Posted by MB | Report as abusive

I have just watched The Warning on pbs.org and the program is excellent. Very thought prevoking when you realize two of the people causing this meltdown are now personal advisers to the president and another works for a company receiving huge amounts of bailout money which gives him an obscene bonus.

Posted by KonaMax | Report as abusive

Excellent episode. Born is a class act and an honorable one. She could have written a tell-all and made some $$, but has chosen to stay on the high road.I wonder now if Summers and Geitner really have their hearts in their current tasks of reforming Wall Street, or if they are just survivors of the sort that would eat their young to do so.

Posted by MJ Macbheath | Report as abusive

What is is going to take to rein in the insanity and uncontrolled greed in this country?This marvelous program has to find a way to the mass media, so that people in every walk of life can experience what we did last night.I hope I live long enough to see greed and insanity replaced by honesty and integrity. The sad thing, is that if the masses are kept in the media darkness, they will never be enlightened and productive citizens.It’s time for an independent grantor to fund a vehicle to bring this program to the attention of the masses.Thank you PBS, my check will follow-

Posted by Alan Musicant | Report as abusive

I understood that the regulators were aware of the calamity that derivatives could cause from the LTCM debacle but was not aware that they were warned months prior this episode by Ms. Born. Kudos to her. She should be SEC Chairman, not Shapiro (although in truth, she’d have make a great AG, no offence to Mr. Holder). Former Chairman Levitt should be embarrassed that he sided with Greenspan, Rubin and Summers. Guys come off as crooks, especially Rubin who took a position at Citi afterwards. Add private equity vultures, hedge fund ponzi schemers and insider trading and its hard not to come away with the impression that the financial world is helmed by a bunch of thieves.

Posted by JR | Report as abusive

There is a polemic here which I find disturbing. The show is clearly a call for more regulation suggesting that the unregulated derivatives markets caused the current crisis.Derivatives may have exacerbated the problem but they surely didn’t create the toxic assets which caused the collapse. A little more scrutiny of Fannie Mae and Freddie Mac would have provided a more balanced piece.

Posted by Sam Jones | Report as abusive

After watching this program, I was sickened with how much disrespect Brooksley Born was shown in her position with the CFTC ~ a regulatory agency established to watch for and warn the government about the current economic meltdown that the entire world is going through. I was even more disturbed that Alan Greenspan, Lawrence Summers, and Robert Rubin (those closed-minded, incompetent individuals) are still holding positions of power. Everyone in American needs to know who Brooksley Born is and what she tried to do 10 years ago to stop our economical collapse before derivatives turned into a $595 trillion (yes, trillion) market, virtually killing our economy. I’m going to send this message to everyone on my email list and ask them to do the same.

Posted by Frances Edgar | Report as abusive

I was appalled and more than a little bit dismayed as I watched this piece last night. The institutionalized arrogance and complacency are mindboggling. I am incredulous that Ms. Born’s analysis could be dismissed with no real review. And the fact that insightful analysis may have been discounted because the person providing that analysis is a woman is most offensive. I would like to think we’ve grown beyond that as a society, but I fear this kind of prejudice is just as prevalent now as then. The Commodity Futures Trading Commission (CFTC) should be granted authority to oversee these kinds of transactions immediately. I think Greenspan’s theory of non-regulation might work if his assumption that people act honorably and honestly at all times is true. But they don’t. That’s been proven in recent history as well as over the millennia. I’m about to send an e-mail to my representatives in Congress and tell them that I want something done about this. I suggest everyone else do the same.

Posted by KRA | Report as abusive

The thing that struck me during this program is how Obama welcomed these crooks into his administration. He needs to explain to us why he thought it would be a good thing to put those who created the problem in positions of power. If this is not explained in a rational way, it could be assumed that he is just a puppet type of leader and Wall Street has bought the Presidency of the United States. We have to face the fact that ours is a pseudo Republic and figure out a way to restore the Constitution and laws that have been thrown away.

Posted by jeanruss | Report as abusive

Absolutely riveting. Born is a class act. I hope she has since received an apology from the three blind mice.. Greenspan, Rubin and Summers…

Posted by Gloria | Report as abusive

What I found most interesting about this program was Greenspan talking in front of a panel after the crisis started. He said something to the effect that he wsa mistaken with his assumptions. He is the SMARTEST guy in the room! This cannot be the situation, it seems far more likely that he and his crew did not want to “rock the boat”. Therefore, they were operating from a position of protection of all of the players in the derivatives markets. Which goes to show this was a mletdown of character.

Posted by Drew | Report as abusive

I also believe that this is a story that should be told over and over until the voting public understands what has happened to them and by whom. Additionally, the story points out an even larger problem for our democracy; that is, congress is too bogged down by special interests and lobbyist to think on behalf of the public. If one were to examine what congress does, they would soon realize that they cannot possibly read nor understand the impacts of the hundreds of bills containing thousands of pages each year that they vote on. The process is out of control and in the hands of special interests with the most money and the most political capital; no longer is congress run on behalf of the people of the republic.

Posted by Martin Haas | Report as abusive

It is heartening to know all these people watched the show. I was thouroughly disgusted to know that Clinton dismissed Ms Born because she seemed too quiet. He should be apologizing to her now. So should Greenspan, Summers and Rubin. If fact the whole country should apologize to her.As was said before,President Obama should watch this show. I would feel a whole lot better knowing he was aware of this whole debacle. Maybe Mr. Geitner would have some restraints put on him.Thank you Frontline for letting us know what kind of idiots were running our welfare into the ground.Please keep on exposing the greed that almost brought the whole world down.

Posted by Kathy Goodwind | Report as abusive

So much for Ayn Rand and her disciple Greenspan and their infatuation with her obsucrantist pseudo philosophical objectivity theory of everything including your hard earned money .

Posted by Anthony Murray | Report as abusive

I really wish I had known of the opinions of Ms. Born, perhaps I would have gotten out of my Wall St. stocks and saved some money. I remember only too well my own reactions to the wholesale de-regulation that had been going on, I sat in the office and said over and over again “They’re out of their minds” but being a woman I was constantly told that I didn’t know what I was talking about even with my degree in economics. Right now I’m waiting for the next two: commercial real estate and reverse mortgages. This country is becoming poor and no one sees or acknowledges it.

Posted by scot | Report as abusive

Frontline and Ms. Brooksley Borne gave the clearest analysis of the recent financial market “meltdown” and OTC Derivitaves I have seen to date. Her courageous, prophetic voice warned the Greenspan-establisment. They saw to it that she was dismissed and discredited. They were blinded by their flimsy and arrogant “success”. After all, how could such financial wizards be doubted? How can we get our elected and appointed geniuses to stay open to contrary advice? We need to hear more from Ms. Borne. Might she find a niche as a regular PBS analyst? She has much to teach us.

Posted by frank bertrand | Report as abusive

Wouldn’t it be a good thing to have this lady, Brooksley Born, in on cleaning up the current mess????!!!

Posted by Patricia Strong | Report as abusive

Draft Brooksley Born for our current mess!!

Posted by Patricia Strong | Report as abusive

President Obama, I am also writing to react to the October 21, 2009 Frontline exposure of the Wall Street titans, including Larry Summers, who, among others titans of finance, perpetrated the destruction of the American economy through egregious greed and reckless arrogance. By their repugnance of any influence from ethical governance such as that courageously displayed by Attorney Born, they successfully prevented the kind of regulatory oversight that is now crucial for you to enforce. I was astonished at your initial announcements of the individuals you chose to be your financial advisors. I fear that, with the continuing bailouts granted to Wall Street and Banks coupled with their disrespect and disregard for how their behavior has hurt America,that you have softened or abdicated your position of ethical high ground and may now be aligning with those who have demonstrated a callous indifference to the defrauding of the American people.Please, say it isn’t so.I support you as President and admire all your efforts in changing the tide of events of the past 8 years and I wish you much success.Dr. G. Sue McCann

Posted by Dr. G. Sue McCann | Report as abusive

Thank you for this show!

Posted by Dr. G. Sue McCann | Report as abusive

Frontline did the most astonishing story in their long history of reporting current news. I look forward to this program of excellent and many times anguishing reporting. The frustration is becoming aware of Brooksley Born who tried to make the morally responsible decision and being thwarted and vilified by a bunch of greedy,arragant men. I hope we hear more from Brooksley in the future.

Once again Frontline hits one out of the park with their coverage of the agony and personal integrity of Brooksley Born. Throughout the Financial crisis I read periodicals, googled explanations about derivatives, credit default swaps and other exotic financial instruments and never even heard of Ms.Brooksley Born. I must have been asleep in the 1990′s when this was going on. The Pesident should invite her to the White House tomorrow for a beer and to put Geitner and Summers on notice. For Ms. Born: what do you think of the “Dark Pools” of liquidity and should we be worried about that??

Posted by LGB | Report as abusive

Disclosing the fact that Greenspan broke down and finally admitted that the way he thought the market could and should go turned out to be against his thinking. This man, that for 45 years, was Americas best financial thinker.The fact that the washington boys which included Greenspan, etc. all felt they were right (in their arrogance). Then this one little lone women, named Brooksly Born issues serious warnings about the OTC derivatives. Her investigation shows she saw realities regarding the dirivitive markets, were not regulated and that they should be reviewed and as it could cause a financial crises in the future. Brookslhy Born told a committee during the Clinton administration. all just shoved her out of the loop, entirely. A good ole boy trick that can be spotted by Government men, you need to realize your job in washington is to be possessed a humbleness and servantnhood for our people not your own.

Posted by Ruth Nagarya | Report as abusive

We need to put pressure on our legislators to firmly regulate or abolish the practices that lead us to this meltdown — before it’s too late! It’s very sad that we cannot trust the Federal Reserve any longer. Shame on you Messrs. Greenspan, Rubin and Summers. Our government has not protected its people. This was an eye-opener. I sure hope that the President Obama did watch this. I’m hoping that this is aired again — at an earlier time so that more people can see what has happened. I too wish to hear more from Ms. Born.

Posted by Patricia DeMoulin | Report as abusive

“the three blind mice.. Greenspan, Rubin and Summers…- Posted by Gloria “That’s laughable! They’re not 3 blind mice: THEY ARE 3 VERY SHARP-EYED RATS WHO KNEW EXACTLY WHAT THEY WERE DOING!

Posted by Roo | Report as abusive

It is sad that the Obama administration picks the same people that helped cause this meltdown. The current head of the CFTC Gary Gensler had worked with Sen. Phil Gramm and Alan Greenspan to exempt credit default swaps from regulation (Commodity Futures Modernization Act of 2000) which led to the collapse of AIG and has resulted in the largest taxpayer bailout in US history.

Posted by richard | Report as abusive

awesome program. did not know about brooksley born. unfortunately, looks like obama has the same folks that got us into this mess to begin with. very disappointing and disturbing.

Posted by Deseree | Report as abusive

Astounding documentary that I was glad I stopped at (PBS) as I was flipping through all the channels. Ms. Born reminds me of Christ who approached religious leaders of his time accusing them that there were wrong in what they thought was right. Some people are sincere in what they do, but obviously sincerely wrong. Another scenario of the blind leading the blind by focusing on those three individuals who obviously who are just as guilty as Murdoff. Yet, in the end of this presentation, our President took in two of these characters in his Administration, and half of our nation voted for him. I’m sure glad there are women out there who stands out like the lady at Enron who exposed the leaders there of what corruption they were doing, and knowing she may lose her job. Another woman, Deborah in the Bible, that no man could take a stand against the nation of Israel of their sin, whereas no man could fill her shoes in those days. We live in sad days, and our nation is reaping the choices we make – AQ

Posted by Andre Quintana | Report as abusive

Kudos to the producer of an excellent story. There is an old Korean saying about “frogs in a well.” The frogs born and raised inside the well have no knowledge or perception of an outside world except for what they see and experience within the confines of their immediate surroundings. The American people, are for the most part, frogs in a well – lost in our day-to day toil to keep food on the table, drive a nice car and provide a decent standard of living for ourselves and our children. I was so angry after watching this I was almost raving. The thing that topped it off was to know that two of Greenspan’s cronies who KNEW and ENCOURAGED the growth of the derivities market are now the chief financial advisors to Obama!! God help us… All I can say is watch the demise of a once great nation. The everyday people upon whose backs will be extracted the price of this and similar travesties, go about our business unaware of how our own system works. Shame on us. Our ignorance has been used to make a handful of thugs rich beyond imagining. This is ultimate greed and corruption. To watch Greenspan in his final hearing before Congress was pathetic. His sick, bloated pride and ego was still not allowing him to admit what he did. His “homies” are now CEOs of major corporations and sitting at the feet of Obama. How sad and how humiliating for us as a county. Thank you for bringing this candid message to the attention of the public.

Posted by Patti Hoff | Report as abusive

Brooksley Born for Supreme Court Justice.

Posted by Steve Henry | Report as abusive

Thank you PBS for this show. Up until now, I was under the impression that it was the Bush Administration’s policies of deregulation of the financial markets that caused the economic collapse, when in fact, it started under Clinton’s watch. Why did mainstream media not report this? Why was blame placed totally on the policies of the Bush Administration?

Posted by John Robidoux | Report as abusive

It was recommended that I watch Frontline, tuesday, 10/20/09 re: Brooksley Born. I was absolutely amazed at her story and would like to know why the news media, such as: CNN, MSNBC, ABC, CBS, NBC, and Fox news would not inform the American people. I find it hard to believe they had no idea. I can only surmise that since they are owned by large corporations and are answerable to them, that we, the American public are being short changed about the truth.

The President needs Brooksley Born and Elizabeth Warren (women) to clean up the mess and get rid of the three blind mice (men). The least Alan Greenspan can do is return the medal of freedom which he does not deserve.Thanks Frontline for giving us this riveting information on unmitigated arrogance and greed of a few who’ve caused so much harm to so many. This story should be published and publicized by the main media (not bought by vested interests) for the main public’s consumption.

Posted by samhita das | Report as abusive

I know our president isn’t stupid, so he must be naive. Why otherwise would he have appointed the gang that couldn’t shoot straight–Rubin, Summers, Geithner? Or has the financial community got some dirt on him that keeps him in line?

Posted by John Tiernan | Report as abusive

To me , Brooksley Born sounded like ” the voice of one crying in the wilderness ” of Washington . Alan Greenspan apparently is a disciple of Ayn Rand and reminds me of the saying , ” people who believe in nothing will fall for anything . ” Richmond Parker

Posted by Richmond Parker | Report as abusive

How powerful are the words in this blog!!… Such a STINGto us who try to believe there is good in our government.Every now and then, there comes a fresh wave of honesty, of’I Must’, and of a personal code of ethics. Thank youFrontline of PBS for their boldness in allowing the public towitness blatant distortion. Thanks for the ever-presentRED FLAG! Gratitude to Brooksley Born.Nancy Weir

Brookslee Born saw the Emperor’s New Clothes.But Lobbyists will protect their positions (remember the cigarette lie perpetuated for 40 years and now exported to China)?Banks now refuse to reduce compensation from $39,000,000 to $18,000,000 to keep the geniuses who orginated derivatives.And Rubin, after ruining the country and Citi, sips sherry off the coast of Sardinia, whileSummers is still running America.

I was astonished to see how Brooksley Born’s warning was ignored based, it seems, exclusively on her gender. She should be the top adviser to President Obama, not Summers and Goethner.

Posted by Mary L Slavik | Report as abusive

I had never heard of Brooksley Born and I’m a news junkie. Greenspan, Rubin and Summers did a good job of “burying” her. Thanks so much to PBS and the producer of The Warning. I have taped it and will encourage my friends to watch for it again. President Obama – beware of these greedy power hungry appointees-Rubin, Geitner and Summers. We’re heading for a repeat of history. I hope cable and main news media give time to Brooksley Born so that she can continue to educate us.

Posted by Anne O'Connor | Report as abusive

I had never heard of Brooksley Born and I\’m a news junkie. They did a good job of \”burying\” her. Thanks so much to PBS and the producer of The Warning. I have taped it and will encourage my friends to watch for it again. President Obama – beware of these greedy power hungry appointees-Rubin, Geitner and Summers. I hope cable and main news media give time to Brooksley Born so that she can continue to educate we the people.

Posted by Anne O'Connor | Report as abusive

I am in agreement with all of the positive posts regarding the Frontline special about Brooksley Born. I JUST KNEW IT!!! I am no financial genius but I felt all this happening in my gut back then. As a self employed interior designer my small company felt the effects of the entire market crashing very early on. I had a sick feeling in my gut every time Greenspan opened his mouth and half the time I didn’t even know what he was talking about. Call it intuition. I felt the same thing the first time George Bush came on the scene. Needless to say I completely trust my gut. I pray President Obama will turn to Brooksly Born as an advisor. Let’s hope there is a silver lining to this dark gray cloud….smarter, less greedy people in the right places, a change of conciousness globally. Maybe it had to get this bad in order to change. Brooksley, I would give you a big hug if I could meet you. You’ve got balls, gal.

Posted by Melissa | Report as abusive

it’s really a joke (and hurts) after knowing the real truth of what’s happened inside the govt. i’m sure people all over the world are making a joke out of Greenspan & his allies.i’ve had my own doubts back when he was re-elected for the so-many times. it’s like c’mon, how old is he?? kinda feeling to see a super-power country’s money was handed to a grandpa. what a bunch of clueless idjets.a big applause to PBS and hands down to Born. too bad, in this world, good people, most of the time, are pushed away, silenced or ridiculed – but when their ideas/warnings are accepted/become reality, those people won’t get credited, either. so sad.. so sad..

Posted by where all mymoney go | Report as abusive

Kudos to Brooksley Born for understanding that there was more to the LTCM mess than a few noble prize winning economists making a mistake. It should also be pointed out that subsequent books and articles appeared warning about systemic risk, including but by no means limited to my own book (with Ben Lee) on financial derivatives and the globalization of risk. The financial field considered most of these books to be not even worth a review, and the reviews that did appear informed us in no uncertain terms that we had no idea what we were talking about. Systemic risk was simply not possible. It is rather important that the public understand that what appears in the financial media presently represents an interested interpretation of what is going on. It represents the point of view of the financial field, and must be understood in that way.

One additional comment. Men such as Robert Rubin, Larry Summers, and Storch (the new head of SEC enforcement)have all spent so much time in the financial field (mostly as Goldman Sacks) that they have deeply internalized its views, dispositions, and perspectives about the relationship between finance and regulation — which is to have as little regulation as possible because regulation is inherently economically disfunctional.

The reason the America is no longer the shining beacon of democracy and the American public are in the dark about actual true American patriots and heroes like Ms Brooksley Born, and news worthy events (like massive nationwide protests before and during the US’ unprovoked INVASIONS and CONTINUED OCCUPATIONS of Iraq, Afghanistan, and of the lands of the Palestinian people (by the other bully of Earth, Israel)), is because the so-called “news” outlets, CNN, ABC, NBC, CBS, CNBC are run by corrupt corporations employing gutless pseudo-”journalists” who flood the airwaves with distractions such as Balloon without a Boy in it, missing 2 year old (Kaylee in Florida), and countless “Reality” shows showing the world that we are a nation of morons who delight in watching such mindless crap. Obama is continuing to break campaign promises of hope and change, and his continued ability to ignore his own behaviour will lead to this being his first and last term as leader of this rapidly sinking ship which is about to explode on the ocean floor and leave nothing but destruction for the masses. Geitner, Sommers, Rubin, Greenspan, Bernanke, etc are just boils that continue to fester along with the likes of the ever greedy evil Cheney and his gang of ex-White House thugs who are walking around like innocent free men.

Other than AIG might not have screwed to such an extent if somebody was watching, explain how Born’s actual regulatory proposals would have helped avert the credit crisis of 2008.Good luck.

Posted by JCH | Report as abusive