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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Oct-11-08 11:39 PM
Original message
The Woman Who Tried To Save Us From This Wall Street Mess
The Woman Who Could Have Prevented This Financial Mess Was Silenced by Greenspan, Rubin and Summers
A sad tale emerges of willfully arrogant behavior designed to undermine a wise woman's good judgment.


Alternet
By Katrina vanden Heuvel, TheNation.com.
Posted October 11, 2008



SOUNDING THE ALARM Brooksley E. Born starkly warned of risks in not regulating derivatives.
Mr. Greenspan, Robert E. Rubin and Lawrence H. Summers, all pictured on Time in 1999,
resisted tighter regulation.


"Break the Glass" was the code-name high-level Treasury Department figures gave the $700 billion bailout; it was to be used only as a last-resort measure. Now millions have been sprayed and damaged by broken glass. But more than a decade ago, a woman you're likely never to have heard of, Brooksley Born, head of the Commodity Futures Trading Commission -- a federal agency that regulates options and futures trading -- was the oracle whose warnings about the dangerous boom in derivatives trading just might have averted the calamitous bust now engulfing the US and global markets. Instead she was met with scorn, condescension and outright anger by former Federal Reserve Chair Alan Greenspan, former Treasury Secretary Robert Rubin and his deputy Lawrence Summers. In fact, Greenspan, the man some affectionately called "The Oracle," spent his political capital cheerleading these disastrous financial instruments.

On Thursday, the New York Times ran a masterful and revealing front page article exposing the culpability of Greenspan, Rubin and Summers for the era of dangerous turbulence we live in. What these "three marketeers" -- as they were called in a 1999 Time magazine cover story -- were adept at was peddling the timebombs at the heart of this complex crisis: exotic and opaque financial instruments known as derivatives -- contracts intended to hedge against risk and whose values are derived from underlying assets. To cut to the quick, Greenspan, Rubin and Summers opposed regulating them. "Proposals to bring even minimalist regulation were basically rebuffed by Greenspan and various people in the Treasury," recalls Alan Blinder, a former Federal Reserve board member and economist at Princeton University, in the Times article.

In 1997, Brooksley Born warned in congressional testimony that unregulated trading in derivatives could "threaten our regulated markets or, indeed, our economy without any federal agency knowing about it." Born called for greater transparency -- disclosure of trades and reserves as a buffer against losses. Instead of heeding this oracle's warnings, Greenspan, Rubin & Summers rushed to silence her. As the Times story reveals, Born's wise warnings "incited fierce opposition" from Greenspan and Rubin who "concluded that merely discussing new rules threatened the derivatives market." Greenspan deployed condescension and told Born she didn't know what she doing and she'd cause a financial crisis. (A senior Commission director who worked with Born suggests that Greenspan and the guys didn't like her independence. " Brooksley was this woman who was not playing tennis with these guys and not having lunch with these guys. There was a little bit of the feeling that this woman was not of Wall Street.")

In early 1998, according to the Times story, one of the guys, Larry Summers, called Born to "chastise her for taking steps he said would lead to a financial crisis. But Born kept at it, unwilling to let arrogant men undermine her good judgment. But it got tougher out there. In June 1998, Greenspan, Rubin and the then head of the SEC, Arthur Levitt, Jr., called on Congress "to prevent Ms. Born from acting until more senior regulators developed their own recommendations." (Levitt now says he regrets that decision.) Months later, the huge hedge fund Long Term Capital Management nearly collapsed -- confirming some of Born's warnings. (Bets on derivatives were a key reason.) "Despite that event," the Times reports, " Congress (apparently as a result of Greenspan & Summer's urging, influence-peddling and pressure) "froze" Born's Commissions' regulatory authority. The next year, Born left as head of the Commission. Born did not talk to the Times for their article.

What emerges is a story of reckless, willful and arrogant action and behavior designed to undermine a wise woman's good judgment. The three marketeers' disdain for modest regulation of new and risky financial instruments reveals a faith-based fundamentalist approach to the management of markets and risk. If there is any accountability left in our system, Greenspan, Rubin and Summers should not be telling anyone how to run anything. Instead, Barack Obama might do well to bring back Brooksley Born and promote to his team economists who haven't contributed to the ugly mess we're in.

LINK

*** P.S. - Also, the pain is a long way from being over. There's still $55 TRILLION worth of these bullshit derivatives floating around out there, and that no one knows if they're worth the paper they're written on. And they're still UNREGULATED. Check out: The $55 Trillion Question at CNN Money.

- The bottom line here? Once again it shows how the good 'ol boys in Congress have screwed us all. Willfully in some cases (Phil Gramm I'm looking at YOU!), but mostly out of stupidity. And so I was not surprised that it was a woman who saw what was happenning and tried to put a stop to it. And I'm even less surprised that the good 'ol boys ganged up on her to shut her up! What is worse, these weren't all Repukes either that did it to her.

And I agree with Ms. vanden Heuvel, when she says that Obama should bring her into his government. I'd think that she'd make an excellant Treasury Secretary, don't you?

==============================================================================
DeSwiss


The Atheist Toolbox





"Prayer is just a way of telling god that his divine plan for
you is flawed -- and shockingly stingy" ~ Betty Bowers
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w8liftinglady Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Oct-11-08 11:43 PM
Response to Original message
1. Kicking so this doesn't get locked
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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Oct-11-08 11:51 PM
Response to Reply #1
2. Thanks!
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rfranklin Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 05:48 PM
Response to Reply #2
55. Gee, only a woman could see this coming...
There wasn't a man in the universe who had the vision to see this coming. Do you really believe that? Kind of sexist don't you think? But then again, it was woman who facilitated this giant fuck-up, and I believe her name was Wendy Gramm. Or was she just the willing chattel of Phil Gramm?
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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 08:59 PM
Response to Reply #55
87. I have no idea how you came to such a conclusion....
...because I didn't write the title to the article. And I never said that ONLY A WOMAN COULD HAVE THE VISION TO SEE THIS COMING. You're putting words into my mouth. But the fact remains that Brooksley Born is a woman and she tesitifed in 1997 before Congress that derivatives should be regulated. Maybe you would have been happier if she were a man?

I know that there were many (men) who also wrote books and spoke about the dangers derivatives as far back as 1992. But none of them had a direct role in regulation. They didn't risk anything in saying what they did. But her role was one of a federal regulator. And her power to do her job was frozen by Congress at the behest of a bunch of good 'ol boys. I don't know of any other men who made such a sacrifice in support of regulation, nor who held their ground against these bastards and Congress. She was castigaged, berated and coerced to change her mind and her testimony. But she refused to do so!!! So yes, all the people who were responsible for doing that to her, were ALL MEN. And a bunch fucking punks at that!

It didn't take a woman to see this coming. But it did take someone with courage (and a lot more balls than Congress has to question and refute THE ORACLE to his face), and to speak out and not back down.

So if you think that sexism didn't play a part in Congress giving her advice short-shrift as result of the good 'ol boys network ganging up on her, then I see little point in trying discuss this any further with you. Clearly you don't live in the world of reality.....
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alllyingwhores Donating Member (362 posts) Send PM | Profile | Ignore Mon Oct-13-08 12:51 PM
Response to Reply #1
106. Doesn't Obama unfortunately have Rubin as his chief financial adviser?
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myrna minx Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Oct-11-08 11:54 PM
Response to Original message
3. Bookmarking for later. Must go to sleep. Thanks for posting. n/t
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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Oct-11-08 11:57 PM
Response to Reply #3
4. De nada!
Get yourself a good night's sleep and come back tomorrow to fight some more!!!

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seemslikeadream Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Oct-11-08 11:59 PM
Response to Original message
5. It's time to burn down the mission, if we're gonna stay alive

BURN DOWN THE MISSION



You tell me there's an angel in your tree
Did he say he'd come to call on me?
For things are getting desperate in our home
Living in the parish of the restless folks I know

Everybody now bring your family down to the riverside
Look to the east to see where the fat stock hide
Behind four walls of stone the rich man sleeps
It's time we put the flame torch to their keep

Burn down the mission
If we're gonna stay alive
Watch the black smoke fly to heaven
See the red flame light the sky

Burn down the mission
Burn it down to stay alive
It's our only chance of living
Take all you need to live inside

Deep in the woods the squirrels are out today
My wife cried when they came to take me away
But what more could I do just to keep her warm
Than burn burn burn burn down the mission walls

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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 12:02 AM
Response to Reply #5
6. If it isn't already too late....
And thanks for those links!!!

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Steely_Dan Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-13-08 03:05 PM
Response to Reply #5
110. Another Great Set of Lyrics...
...by Bernie Taupin. Elton John would have never realized as much success without him.

-P
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pansypoo53219 Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 12:09 AM
Response to Original message
7. i may have gotten that warning in my Washington Monthy
years ago. no idea where it is, but i bet it quotes her. new these were bad YEARS ago. but since i don't invest.....
TWM also told me 401Ks were crap.
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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 12:19 AM
Response to Reply #7
10. What is worse....
...instead of Congress just listening to Greespan, Rubin and Summers, they should have been listening to two of the richest guys in the world:

From the NYT piece:

George Soros, the prominent financier, avoids using the financial contracts known as derivatives because we dont really understand how they work. Felix G. Rohatyn, the investment banker who saved New York from financial catastrophe in the 1970s, described derivatives as potential hydrogen bombs.

And Warren E. Buffett presciently observed five years ago that derivatives were financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.


And then if not them, then what about their own government accounting office experts who are there to advise Congress on the things they don't understand?

Still, over a long stretch of time, some did pose questions. In 1992, Edward J. Markey, a Democrat from Massachusetts who led the House subcommittee on telecommunications and finance, asked what was then the General Accounting Office to study derivatives risks.

Two years later, the office released its report, identifying significant gaps and weaknesses in the regulatory oversight of derivatives.

The sudden failure or abrupt withdrawal from trading of any of these large U.S. dealers could cause liquidity problems in the markets and could also pose risks to others, including federally insured banks and the financial system as a whole, Charles A. Bowsher, head of the accounting office, said when he testified before Mr. Markeys committee in 1994. In some cases intervention has and could result in a financial bailout paid for or guaranteed by taxpayers.

- Congress was WARNED.....
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Oak2004 Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 08:56 PM
Response to Reply #10
86. That article makes the lot of them look derelict of duty n/t
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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 09:07 PM
Response to Reply #86
88. I totally agree.
I mean, what's the point in hiring experts to work for Congress if you're going to ignore their advice?

Clearly this was driven by the awe and veneration with which Alan Greenspan is was held, and it seemed that all of Congress quaked in their boots when he deigned to bless us with his words of economic wisdom.

But anyone who knew Greenspan's history should also know that he is a devotee of Ayn Rand. And that alone should have been enough to exclude his POV as far as I'm concerned.....

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Swamp Rat Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 12:15 AM
Response to Original message
8. k&r


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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 12:21 AM
Response to Reply #8
12. Swamp Rat....
...you are simply THE GREATEST!!!!

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Swamp Rat Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 12:23 AM
Response to Reply #12
14. Thanks. Here's a new one:
:D




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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 12:30 AM
Response to Reply #14
16. Damn!
I wish I'd had some warning before I scrolled down to that!!

:rofl: Damn beer went down the wrong way!!!!


Thanks Swampster... ;)
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4lbs Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 06:22 AM
Response to Reply #14
29. You'll get some freepers fawning over this one because...
it shows Palin in a low-cut dress showing cleavage.

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Mr_Jefferson_24 Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-13-08 12:51 AM
Response to Reply #14
97. LOL -- Good stuff.
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BrklynLiberal Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 12:19 AM
Response to Original message
9. Another Cassandra...warning, but being ignored.
She would be a good addition to the Obama Administration.
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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 12:22 AM
Response to Reply #9
13. That's because they couldn't see the TRUTH for the.....
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

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slipslidingaway Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 12:20 AM
Response to Original message
11. Thanks ...
http://www.cftc.gov/opa/speeches/opaborn-40.htm


BROOKSLEY BORN, CHAIRPERSON

COMMODITY FUTURES TRADING COMMISSION


"...Today I would like to discuss recent events in the OTC derivatives markets and to share some thoughts about the appropriate role of regulation in responding to them. The events surrounding the financial difficulties of Long-Term Capital Management L.P. ("LTCM") raise a number of important issues relating to hedge funds and to the increasing use of OTC derivatives by those funds and other institutions in the world financial markets.

As you know, LTCM is a hedge fund that was able to borrow billions of dollars based on the reputation of its principals and its profitable trading. It entered into enormous positions in exchange-traded and OTC derivatives. When prices moved against it, it was on the verge of defaulting on its commitments. The Federal Reserve Bank of New York encouraged its major creditors and swaps counterparties -- many of the largest U.S. and European banks and investment banks -- to infuse more then $3.6 billion into LTCM to prevent its collapse and the possible disruption of the global economy..."

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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 12:26 AM
Response to Reply #11
15. And Greenspan....
...Rubin, Summers, et. al. were inexplicably able to "convince" Congress that we could trust Wall Street robber barons not to be GREEDY. That the market would be "self-correcting." Bullshit that comes straight out of some damned Ayn Rand novel.

- Right....
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slipslidingaway Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 12:37 AM
Response to Reply #15
18. Financial Economists Roundtable - 1994
And these economists basically agreed...

http://www.stanford.edu/~wfsharpe/art/fer/fer94.htm

"...In conclusion, although some major end-users, mutual funds, hedge funds, securities firms, and even banks have incurred derivatives-related losses, most of these losses have been due to inadequate risk-management systems and poor operations control and supervision. These losses have not threatened the stability and efficiency of financial markets, and, by encouraging the development of better risk-management and operational controls, they have had a salutary effect. The best discipline against systemic risk in any market, including derivatives, is to foster a market in which participants have an incentive to manage themselves prudently and can respond quickly and innovatively to market conditions."


Rashad Abdel-Khalik, University of Florida
Edward I. Altman, New York University
George J. Benston, Emory University
Gerald O. Bierwag, Florida International University
Marshall E. Blume, University of Pennsylvania
Richard Brealey, London Business School
Willard T. Carleton, University of Arizona
Andrew H. Chen, Southern Methodist University
Franklin R. Edwards, Columbia University
Robert Eisenbeis, University of North Carolina
Martin J. Gruber, New York University
Nils Hakansson, University of California at Berkeley
George G. Kaufman, Loyola University of Chicago
Alan Kraus, University of British Columbia
Haim Levy, Hebrew University of Jerusalem and University of Florida
Robert Litzenberger, University of Pennsylvania
Robert C. Merton, Harvard University
Merton Miller, University of Chicago
Franco Modigliani, Massachusetts Institute of Technology
Stewart C. Myers, Massachusetts Institute of Technology
Richard Roll, University of California at Los Angeles
Stephen Ross, Yale University
Myron Scholes, Long Term Capital Management
Eduardo Schwartz, University of California at Los Angeles
Kenneth E. Scott, Stanford University
William F. Sharpe, Stanford University
Seymour Smidt, Cornell University
Hans Stoll, Vanderbilt University
Seha Tinic, Koc University (Turkey)
James Van Horne, Stanford University
Roman L. Weil, University of Chicago
Richard West, New York University
J. Fred Weston, University of California at Los Angeles





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riverdeep Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 12:43 PM
Response to Reply #18
41. So all these economists were calling for no regulation?
That the institutions just didn't have the proper 'risk-management and operational controls'?

If so, that's a lot of experts.
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slipslidingaway Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 05:57 PM
Response to Reply #41
56. That was their conclusion, but I just happened on this link...
surely there were others that took the opposite position.

:shrug:
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slipslidingaway Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 12:33 AM
Response to Original message
17. Back in 1993 someone suggested a trade tax on derivatives
Edited on Sun Oct-12-08 12:33 AM by slipslidingaway
to try and reign in some of the speculation, force transparency and generate revenue.

The point was also made that too much capital was being spent on these products instead of real improvements for our country and the people.

:(


1993 and 2000 Derivatives articles...Who could have known???

http://www.democraticunderground.com/discuss/duboard.ph...

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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 12:46 AM
Response to Reply #17
19. As per usual....
...DU members are always way ahead of the curve.

I must save your links to her speeches for later review. Do you know if it says who were the members of the Congressional Committee to whom she spoke, besides Markey?

But even more from my perspective, after the "junk bond" fiasco in the late 80s' one would've thought that Congress wouldn't be so willing to allow unregulated/no-oversight sectors on the stock market to just reappear and go unchallenged. I suppose they were still operating under the mantra that: "GREED IS GOOD."

But all these warnings also demonstrate that Congress was in the loop on how disasterous credit default swaps could be, and yet turned away from their oversight responsibilities. Which also explains their reticence to point fingers now.

- But I'm pointing them.....
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slipslidingaway Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 12:59 AM
Response to Reply #19
21. I have not searched for info on the hearings yet...
"Which also explains their reticence to point fingers now."

:thumbsup:


Sseveral posters on DU had mentioned derivatives, unfortunately they did not receive the attention they deserved IMO.





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Chimichurri Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 12:57 AM
Response to Original message
20. It might be too late but this is good to know.
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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 01:11 AM
Response to Reply #20
22. It could very well be....
...too late to un-do what has been done. The value of this knowledge at this point, can only serve us now as a hard lesson learned. Maybe we'll even stop it somehow. But then, I'm a dreamer.

Reganomics, supply-side, unregulated markets, all those concepts are now repudiated. Yet I can take little comfort in that knowledge now, because I have little doubt there is more pain to come. There is $55 Trillion Dollars in derivatives that are still floating out there now. And nobody knows what they're really worth.

- This should give everyone pause....
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BanzaiBonnie Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 01:14 AM
Response to Original message
23. Perhaps Obama could tap her for Secretary of the Treasury



And a little lightness :

What's the difference between a gambler and a Republican?

Gamblers use their own money.
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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 01:25 AM
Response to Reply #23
24. ROFL!!!
:rofl: That's just what this thread needs is some lightness.

Talking about derivatives is a downer. The very name sucks. Derivatives, swaps.... it all sounds so incestuous.


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Snotcicles Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 08:40 AM
Response to Reply #23
31. Whats the difference between praying in church, and praying at the casino?
When praying at the casino, you really mean it.
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thecrow Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 05:22 AM
Response to Original message
25. kickin
and reckin
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magellan Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 05:27 AM
Response to Original message
26. Brooksley Born for Treasury Sec!
k&r
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Waiting For Everyman Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 05:40 AM
Response to Original message
27. It was a bad case of "expertitis". K&R

Thanks!
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muriel_volestrangler Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 05:56 AM
Response to Original message
28. From the NYT article - astounding idiocy from Greenspan
One prominent financial figure, however, has long thought otherwise. And his views held the greatest sway in debates about the regulation and use of derivatives exotic contracts that promised to protect investors from losses, thereby stimulating riskier practices that led to the financial crisis. For more than a decade, the former Federal Reserve Chairman Alan Greenspan has fiercely objected whenever derivatives have come under scrutiny in Congress or on Wall Street. What we have found over the years in the marketplace is that derivatives have been an extraordinarily useful vehicle to transfer risk from those who shouldnt be taking it to those who are willing to and are capable of doing so, Mr. Greenspan told the Senate Banking Committee in 2003. We think it would be a mistake to more deeply regulate the contracts, he added.

Today, with the world caught in an economic tempest that Mr. Greenspan recently described as the type of wrenching financial crisis that comes along only once in a century, his faith in derivatives remains unshaken.

The problem is not that the contracts failed, he says. Rather, the people using them got greedy. A lack of integrity spawned the crisis, he argued in a speech a week ago at Georgetown University, intimating that those peddling derivatives were not as reliable as the pharmacist who fills the prescription ordered by our physician.
...
In his Georgetown speech, he entertained no talk of regulation, describing the financial turmoil as the failure of Wall Street to behave honorably.

In a market system based on trust, reputation has a significant economic value, Mr. Greenspan told the audience. I am therefore distressed at how far we have let concerns for reputation slip in recent years.


:banghead:

The point is, that you regulate pharmacists. If you have some kind of mechanism that can do some good, but it can get out of control because of personal failings of people involved, then you regulate it! It's basic Adam Smith stuff, that you'd think Greenspan would be able to recite in his sleep - that in markets, people are out to enrich themselves, and aren't acting for the sake of others, or 'honour'.
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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 08:50 AM
Response to Reply #28
32. However....
...Mr. Greenspan as a devotee of Ms. Rand, believes that all collective effort, particularly by government, is inherently evil and should be avoided at all costs. What is striking to me however, is that many of these same Congressional representatives sat on their hands a few years earlier when another kind of derivative, the Junk Bond, had previously brought the market to its knees. And for the same reasons: DUPLICITY & GREED.

Its mind-boggling for anyone to think that with trillions of dollars at stake, we can simply "trust" robber barons on Wall Street to be honest and "do the right thing." And that the market will self-correct. That these investment banks would contain problems and deal with their own themselves, so as to avoid harming the system.

Of course that all sounds great on paper or in a rousing patriotic speech on free markets before Congress, but the reality of human avarice should have been their guide. Because once one realizes that for all this to work, no one can really know the truth about what they're buying. And with no oversight or regulation, nor any requirements for reserve capitalization, they could and did say whatever they wanted about the value of these bonds. And insurance companies like AIG "insured" the bonds, lacking suffficient money to back them up but only because in this unregulated sector, it isnt' really insurance when you can call it a "credit default swap." And so they too went unregulated.

And this deregulating language was specifically place into that 11,000 page bill that repealed New Deal era protections against such shenanigans under the Glass-Steagall Act, with the passage in 1999 of the Gramm-Leach-Bliley Act. And which was authored by then-Senator Phil "I'm No Whiner" Gramm of Texas. This crap was bought and swallowed whole by Congress hook, line and sinker.


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JDPriestly Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 08:27 PM
Response to Reply #28
82. Die Hard economic ideologist
OF course, greed dominates if markets are not regulated. Greenspan is either naive or evil.
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Dystopian Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 08:21 AM
Response to Original message
30. KandR
Police state...and they stole our money...

This is the only way my simplistic mind can connect the dots, or make sense of any of this. :scared:

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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 09:03 AM
Response to Reply #30
33. The former is much more problematic to achieve....
...than the latter.

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Hydra Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 09:56 AM
Response to Original message
34. More and more, we're finding out that these people scammed us
I dislike how they keep saying these instruments can't be valued- if they can't be valued, it's because they don't want them to be.

Given that fact, they were creating money from something that wasn't there, and when it came time to pay the piper, they demanded that the taxpayer(which isn't them) make good on these debts for them.
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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 07:00 PM
Response to Reply #34
57. Your assessment pretty much....
...wraps it all up in a nutshell. The decisions to buy these "Toxic Bonds" was based upon the good 'ol boy network and the history of making oodles of money with them in the past. At least in the beginning. By the end, they were looking for anyone who was dumb enough to buy them because they knew the clock was about to run out.

Although usually in a scam the victim(s) has no clue about what's going on. But in this case there were plenty who knew. Yet OUR Congress didn't want to hear them and instead relied upon the golden droppings from the mouth of the Oracle, Alan Greenspan and his fledglings, Robert Rubin and Larry Summers.

- I will say this, I've never like Alan Greespan. Even before derivatives.....
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leftchick Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 10:05 AM
Response to Original message
35. some more on that filthy rotten greenspan.....
K&R! Excellent Post!



http://crookedtimber.org/2008/10/09/brooksley-born-and-... /

<snip>

Greenspan is the more interesting case. In a speech at Georgetown Law School on October 2, against a background of boilerplate about the wonders of the free market, he argued :

Another important requirement for the proper functioning of market competition is also not often, if ever, covered in lists of factors contributing to economic growth and standards of living: trust in the word of others In a market system based on trust, reputation has a significant economic value. I am therefore distressed at how far we have let concerns for reputation slip in recent years During the past year, lack of trust in the validity of accounting records of banks and other financial institutions in the context of inadequate capital led to a massive hesitancy in lending to them. The result has been a freezing up of credit.


Okay, so he thinks that Borns proposal (or something like it) a decade ago greater disclosure of trades and reserves would have prevented the erosion of trust, right? Not exactly. The Times quotes Greenspan thusly: Governments and central banks could not have altered the course of the boom. Or, presumably, the bust.

G.A. Cohen critical of Rawlss institutional focus is sometimes accused of being exclusively concerned with the ethos of a society and individual behavior, rather than the background institutional structure within which individuals act. In his new book, he denies this both are important for justice, he says. Unlike Cohen, Greenspan really does seem to be blaming the market participants rather than the regulatory regime market players should have been more concerned about their reputations. As the Times article summarizes his view, traders got greedy and sacrificed their integrity. Im pretty sure Greenspan, the Ayn Rand acolyte, wouldnt quite put it this way, but still, he holds that no institutional changes could have altered the outcome.

At the same time, of course, he holds that now theres plenty for the government to do in cleaning up the mess that irresponsible individuals have produced: the federal government must take aggressive steps to protect workers and businesses from the harmful effects of a financial crisis. The great majority of those deserving this protection had no role in causing the crisis. Hmm. I thought market transactions werent supposed to harm innocent third parties. But when they do, self-professed libertarians urgently advocate immediate, extensive action that would prevent a serious economic contraction. But not, apparently, greater disclosure on market transactions.
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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 07:07 PM
Response to Reply #35
60. Thank you!
What is so amazing here to me is that these so-called sophisticated Washintonians, these politicians who run the levers of government of the world's super power were duped into believing that you could "TRUST" these rich bastards to be honest. Every market crash and every Depression this country has experienced has been due to GREED and a lack of oversight.

We're talking TRILLIONS of dollars here. Okay? TRILLIONS.

What's so galling is that they'll require accountability for a single mother to prove she is eligible for food stamps. They'll deny a veteran who has fought and suffered injury, but deny treatment on a technicality or redefine the injury so s/he can't get help. But these assholes we're suppose to just trust?!?!?!

- Hell.....
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JNelson6563 Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 10:06 AM
Response to Original message
36. K&R
This is wonderful. I mean that someone higher up had a clue. As a not-formally-educated in the world of finance kinda person I saw this coming long ago. Oh so long ago! As these dark days have been playing out I admit to feeling a little uneasy at how glaringly obvious it has become that all these experts are so surprised at this mess. I like to believe experts and the "people in charge" know more than I and are smarter than I. Not the case, apparently. Except for this lady and probably certain other unknown individiuals that got quietly removed from the stage so as not to end the party.

Julie
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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 08:23 PM
Response to Reply #36
79. I'm like you....
...and I figured it out long ago as well. Its the reason we have safes in banks and locks on doors -- to keep people honest.

But the Michael Milken scandal which previously brought down Wall Street in the late 80s, with another slick kind of derivative -- THE JUNK BOND -- should have been a clue for Congress to say Hell No!!! But as the representative says in Bill Maher's movie Religulous, "you don't have to take an IQ test to go to Congress."

- And maybe that's where our real problem lies....
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trthnd4jstc Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 10:55 AM
Response to Original message
37. We need a new Currency Based on Labor and not Credit and Debt.
Imagine Money Based on Labor instead of Credit and Debt. We would have a more stable economy and the rich would no longer be able to rule the rest of us. The exchange of Labor would be the creator of wealth, which, even you richies have to admit, is the true source of all wealth, and not your capital. Capital derived from debt will always fail us. There will always be bankruptcies and abuses of power by capital. Let us end the tyranny of the few over the rest of us. Money created through Labor is fairer, and better for our society.

Please look this up, Time Money, by Bob Blain, Professor Emeritus, SIUE: http://www.siue.edu/~rblain/index.htm
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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 07:14 PM
Response to Reply #37
61. I'm not sure how that would work....
...but I tend to agree. I'm bookmarking your link for review later.

But I do know that at least labor has an intrinsic value. And it is the bedrock foundation of all commerce. Without it, no matter how much gold you have, it won't do you any good if you have to carry it all by yourself, or worse, due to a lack of laborers there's nothing to spend it on. And no matter how great one's seeds are, someone has to plant them and be there for the harvest. And no matter whether one has built a better mousetrap, the world won't be beating a pathway to your door, until someone has built it.


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trthnd4jstc Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 09:31 PM
Response to Reply #61
91. How it would work:
Instead of the Government issueing bonds which are purchased by others and then the Government depositing those funds into a bank account, the Government will issue Time Dollars to Employers who will disburse them based on hourly labor. Professor Blain has worked out how to make the transition from our credit/debt dollars to time dollars. This is, I believe, the path to ending income disparity, and the exploitation, and abuse by the wealthy over the rest of the planet. This, or something like it, will be the way that we can have peace on earth.
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SammyWinstonJack Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 11:00 AM
Response to Original message
38. K&R
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speedoo Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 12:06 PM
Response to Original message
39. K&R. Thanks for posting.
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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 07:15 PM
Response to Reply #39
62. You're welcome!!!
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Joe Chi Minh Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 12:18 PM
Response to Original message
40. I don't know if it is the Congressional Medal of Honor, but Brooksley E Born
desrves the highest accolade your country bestows, her face on a postage stamp and magnificent, bronze monuments on at least Capitol Hill and Wall Street.

It's astonishing the number of women who have proved to be supreme "whistle-blowers" in so many major areas of American public life. The Enron accountant, the Army Procurements officer, and so on. Ultimately, of course, they were a manifestation of outstanding probity, although the fact that, as has been said among our parliamentarians in the UK, women are not "clubbable", maybe a small part of the explanation of the phenomenon. I think they tend to have a pedantic notion that facts, truth, may even at times trump the sacrosanct nature of the club. And the immemorial fact of "the buck stopping with them", when it came to looking after the family may have been a key factor in all of these cases, since the nation is after all, our larger family.

Like so many African Americans of both sexes, and so many on the losing sides of wars, or inconvenient reminders of some disgrace on the part of governments of the winning side, Ms Born and her sisters, will perhaps remain largely unsung heroes, in comparison with heroes of perhaps lesser stature of the dominant sex, adversaries, etc. Even inventors, if the double-helix is any guide, though there are plenty of other examples of the real inventors and discoverers being expunged from the records of the "greats".

If only she had declared aloud and in public, "One day, Mr Greenspan, your folly will be recognised in all its catastrophic magnitude, though I expect that, for the present, you will continue to sleep the sleep of a child and continue in your waking hours to be feted as the Oracle. Well, pardon me if I pass on that one, won't you."

You can imagine the uproar after that, can't you? It would have been akin to that after Aneurin Bevan called the Tories, "vermin", during his efforts to form the National Health Service. Or perhaps it was a little while after.
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jmowreader Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 03:05 PM
Response to Reply #40
46. The highest civilian award is the Presidential Medal of Freedom
And yes, she deserves one.
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truedelphi Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 03:23 PM
Response to Reply #40
48. Unfortunately, due to the major influence of the CABAL
of Big Oil, Big Banking, Big Military (And Big Pharma and Big Insurance) our media probably did hear her say that. Probably more than once. No one can convince me that someone at the Wall Street Journal, or one of the many other financial journals, did not hear her saying this
aloud.

But the Press went their merry way, talking about Madonna and Britney, and How, "Boy isn't that Greenspan something!"

Our press has been bought and paid for many, many times. It took me seven years to realize it in a provable, step by step way -
http://oldelmtree.com/discussion/index.php?topic=53.0
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Joe Chi Minh Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 04:01 PM
Response to Reply #48
49. Ironical in a way: people like Orwell and Onion guys set out to write satires,
and end up writing predictive history books - although arguably understated.
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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 07:21 PM
Response to Reply #40
63. I agree wholeheartedly.
What should be noted here is how it turned out that the "boys" all ganged up on the one girl to shut her up! Right out in the open. Until they forced her to leave government altogether. Just like on the playgorund. A woman's insight was given short shrift when compared to the bloviations of these "respected men of commerce."

Until the Patriarchy is brought its knees, nothing will ever change. And we'll be back here at this same point again, at some later date.

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riverdeep Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 12:51 PM
Response to Original message
42. There is one problem here.
The dates that this took place falls under Clinton's watch. Bill Clinton reappointed him to the Fed. I don't know the particulars of who in (the Republican controlled) Congress was 'influenced', but the fact remains that Clinton could have removed him if he found his actions harmful.
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w4rma Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 02:33 PM
Response to Reply #42
45. Greenspan: I think Bill Clinton was the best Republican president weve had in a while.
MR. RUSSERT: Let me pick up on some interviews that youve given this week as youve been touring, talking about your book, The Age of Turbulence. You said this: I think Bill Clinton was the best Republican president weve had in a while. Republican?

MR. GREENSPAN: Im sure he doesnt like that joke, but if you look at his record compared to what I think appropriate policy ought to be, hes for free trade, hes for globalization, he was for welfare reform, fiscal restraint andtrue enough, hes not a Republican. Im sorry, President Clinton, I didnt mean to say that. But I must say, I had to follow an awful lot of your particular guidelines and found them very compatible with my own.
http://www.msnbc.msn.com/id/20941413/page/4
http://www.democraticunderground.com/discuss/duboard.ph...
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defendandprotect Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 07:06 PM
Response to Reply #45
59. Greenspan/Clinton-DLC . . . perfect together....!! Want more of it--???
Then let's be sure that we have a way to have leverage on Obama --

No more Pelosi/Reid B.S. -- No more DLC B.S. --
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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 07:30 PM
Response to Reply #42
65. That's not just a problem....
...but a reality. The representatives that we have elected (too often in my view), deferred to "experts" without adequate consideration to common sense, nor opposing views. I mean, who would YOU or I trust with trillions of dollars with no oversight?

But also at this juncture, Congress was controlled by the Repukes. Additionally, this "bill" that repealed regulatory oversight authority under the Glass-Steagall Act of 1933, was secreted into a spending bill by Phil Gramm the bill's sponsor (and John McCain's economic advisor).

Nevertheless, you're right. There's plenty of blame to go round on this one.

- Including our own.....
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riverdeep Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 01:05 PM
Response to Original message
43. How many disasters does this make?
According to Condi, "no one could have predicted" that planes would be hijacked and flown into towers. Except they did.

Well, lets start for example with September 12th, 1994. A Cessna 150L crashed into the south lawn of the White House barely missing the building and killing the pilot. Similarly, in December of 1994, an Algerian armed Islamic group in Paris hijacked an Air France flight in Algiers and threatened to crash it into the Eiffel Tower. In October of 1996, the Intelligence community obtained information regarding an Iranian plot to hijack a Japanese plane over Israel and crash it into Tel Aviv.


http://www.propagandamatrix.com/multimedia/Bush_admin_k...

They also couldn't have predicted that the levies in New Orleans were vulnerable, or that Iraq would not be a cakewalk, or that stuffing the Justice Department with political hacks would destroy the very concept of justice, or that warrantless wiretapping would be abused by those in power if not checked, or a hundred other things that no one in the Bush administration seems to able to predict (while those outside have no problem), but with amazing coincidence, seem to benefit wonderfully from.

There were many predicting an economic fall from many quarters, but saying the economy was bad was considered a critique of the Bush Presidency and his job. So up until a month ago, Bush and his cohorts (including McCain) were repeating the line 'the fundamentals are strong.'
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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 07:35 PM
Response to Reply #43
66. In this case....
...I'll defer to P.J. O'Rourke who said:

"The Republicans are the party that says government doesn't work and then they get elected and prove it.

They're never at fault when shit happens on their watch.

- Even now they're trying to blame all this on the CRA (Carter) and Clinton....
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malaise Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 01:20 PM
Response to Original message
44. K & R
Bravo Brooksley Born
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seemslikeadream Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 03:10 PM
Response to Reply #44
47. ABSOLUTELY
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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 07:36 PM
Response to Reply #44
67. You've got that right!
- You go girl!!!!
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varelse Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 04:04 PM
Response to Original message
50. K&R
I just can't think of anything to say - other than thanks for this post and I think I'll bookmark it and pass the link about.
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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 07:39 PM
Response to Reply #50
68. You're very welcome.



After having worked so long in the low-income housing field, I cringed at the lies being told about the CRA. They're blaming the victims like they always do.

- Repukes have no honor and no soul....
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redqueen Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 04:17 PM
Response to Original message
51. "promote to his team economists who haven't contributed to the ugly mess"
Hear hear!

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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 07:40 PM
Response to Reply #51
69. Right on!!!
Tar and feathers for the rest!

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NBachers Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 04:41 PM
Response to Original message
52. OK, good- Treasury candidate unearthed
So far, I've got:

AG- RFK Jr. or, if you can withstand the slime from the Repugs, John Edwards
DOE- Al Gore
Treasury- Brooksley Born
SOS- Bill Clinton (yeah, I know, but he's known and admired around the world; he's energetic and knowledgeable and committed.) If you don't like Clinton, then George Mitchell
Defense- Wes Clark's not eligible. Damn!
Agriculture- Bob Graham
VA- Max Cleland
Education- Bill Cosby - OK, give me a better one.

Too many other blanks I haven't filled in yet -
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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 07:48 PM
Response to Reply #52
70. I think we need....
...some NEW unsung heroes like Brooksley Born. Some of the old guard, true enough. But you can't have real CHANGE if one is using the same old people with the same old ideas. And that's what the old guard has the most of. Old shit.

Personally, I'm tired of these same old faces. We need people who aren't whores for the corporations (*cough* DLC *cough*). I'm almost 57 and I'm sick of looking at some of these faces. We need 21st century faces that look forward, and not always looking back.

- And on top of that, we need to draw and new sharp and dark line that distinguishes Repukes from Dems.
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spooky3 Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 04:59 PM
Response to Original message
53. It's the same Lawrence Summers
who ignored research on gender differences when spewing his sexist views on women in science under the guise of "academic freedom." It's no surprise that someone with so little respect for high achieving women would blow off Ms. Born as well. Obviously that was not his only motivation but it's in the mix.
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spooky3 Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 05:00 PM
Response to Reply #53
54. ps - I like the advice to Obama - and why not hold Congressional hearings now and ask her to speak?
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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 07:53 PM
Response to Reply #54
74. Better still....
...bring her onto the campaign team! That's assuming she's not totally disgusted with government.

- Its the same reason I left. Politics and bullshit.....
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spooky3 Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-13-08 01:30 PM
Response to Reply #74
108. yes, that's the advice in the article I meant to refer to
and to bring her into the Obama administration later.
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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 07:51 PM
Response to Reply #53
72. I hadn't been aware...
...of this about Summers. But then I was never enthralled by the Clinton Administration either. I saw them then and now as Repuke Lite. I think that we need more women in positions of power in government if we're ever going to change this shit.

Otherwise, we'll just keep making the same stupid mistakes. Just like we've done in the past.

- And just like what is happening right now.....
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spooky3 Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-13-08 01:33 PM
Response to Reply #72
109. It's one of the reasons he was ultimately "persuaded" to leave Harvard
A person so ignorant of research but offering that type of opinion has no business heading a great university. If interested, you might search for the MIT report on women in science and the university's actions taken in response to it. What a contrast.

I agree completely about women in positions of power.
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defendandprotect Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 07:03 PM
Response to Original message
58. Nothing like the boys getting together . . . . Summers is a pig ---
and Greenspan and Rubin are even piggier --- !!!

Thanks also to Clinton and the deadly DLC -- !!!

We lost a lot with Clinton ---

and we had best keep a firm and wary eye on any new Democratic

admin ---

Don't take anything for granted; remember what we've seen from

Pelosi and Reid thus far --- ye gads!!!



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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 07:59 PM
Response to Reply #58
75. I couldn't agree with you more!
I live in the south and I watched then-Governor Clinton next door as he permutated the Democratic Party into a cheap knock-off copy of the Repukes. Whoring for the corporations and buying into southern racial crap regarding social policies in order to get the good 'ol boy votes. Well, John McCain's got those good 'ol boys now.

- And as you can see, they're not worth it.....
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defendandprotect Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-13-08 12:27 AM
Response to Reply #75
96. Personally, I'm coming to think that the "Southern Strategy" was a lie . . .
Jimmy Carter, in fact, carried all but one of the Confederate states --

but, I'm also coming to think that it was a cover story for steals which

have probably been going on since '63 -- and the coup on our government.

Things always seemed odd after that -- but you just tend to think you're

out of sync with the rest of the world.

Sometime after the 2000 election, I came upon the history of computer

steals which seem to have begun with the big computers coming on line --

the ones the "media" began using back then to predict results. To "call" them.

http://www.constitution.org/vote/votescam__.htm

Two journalists in Florida -- Jim & Ken Collier investigated the

computers and the oddities surrounding the results beginning in the late 1960's!!!


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elleng Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 07:29 PM
Response to Original message
64. PRAY that he does this!
"Barack Obama might do well to bring back Brooksley Born and promote to his team economists who haven't contributed to the ugly mess we're in."


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grannylib Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 07:51 PM
Response to Original message
71. *sigh* and are we SURPRISED??? Hell no.
Andrea Mitchell should give Hubby a swift kick in the balls for this one. Twice a minute. For the rest of his life.
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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 08:00 PM
Response to Reply #71
76. He's probably not using them anyways.....
:rofl:
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elleng Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 07:52 PM
Response to Original message
73. More significant info
Edited on Sun Oct-12-08 07:59 PM by elleng
'The nations leading financial officials Levitt, Federal Reserve Chairman Alan Greenspan, Secretary of the Treasury Robert Rubin, and his deputy Lawrence Summers pummeled the proposal, saying it was dangerous to even discuss the idea. Led by Rubin, Levitt and Greenspan, the Clinton White House instead proposed a modest set of reforms. Months later, Clinton Administration officials walked away from their own recommendations, concluding the market could be best managed by the financial industry.

Neither Rubin, Summers, nor Greenspan would comment for this story. Rubin and Summers are serving as economic advisers to Democratic presidential nominee Barack Obama, who has repeatedly blamed the financial crisis on regulatory failures of the Bush Administration.

Levitt, the longest serving head of the SEC, said Democrats and Republicans should be held responsible. Asked about Democratic House Speaker Nancy Pelosis observation that the financial collapse can be blamed on the anything goes policies of the Bush Administration, Levitt said, No, I think it goes back before that. This was decided under Clinton as well.'

http://www.propublica.org/feature/former-clinton-offici... /

GRAMM IS THE WORST ATTRIBUTE OF A MCC ADMIN:

...Long-Term Capital was looked at as such an aberration, recalled Levitt, that the Working Group did not see the need for systemic change. He also said that strong personalities like Sen. Phil Gramm (R-Texas) the banking committee chairman, opposed the change.

Phil Gramm in particular, with Alan Greenspan, were patron saints of the derivatives business, says Levitt. They clearly wanted that business to be unregulated.

During the production of the April 1999 report, Brooksley Born retired, and with her exit, impetus for regulation disappeared. Larry Summers replaced Bob Rubin as Treasury Secretary soon after. Six months later, a new Presidents Working Group report (pdf) suggested that, far from regulating derivatives, Congress should expressly exempt them from oversight. Later that month, the commission quietly withdrew its proposal.

In late 2000, Gramm, currently one of the top economic advisers for Republican presidential nominee Sen. John McCain, sponsored an amendment that, among other things, prohibited the commission from regulating derivatives.'



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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 08:13 PM
Response to Reply #73
77. I think that you've....
...put the finger on the two main actors here. Gramm and Greenspan. But there were many more bit players as well. In many ways, this whole thing was being driven by a cult of personality:


Time and again, Mr. Greenspan a revered figure affectionately nicknamed the Oracle proclaimed that risks could be handled by the markets themselves. Proposals to bring even minimalist regulation were basically rebuffed by Greenspan and various people in the Treasury, recalled Alan S. Blinder, a former Federal Reserve board member and an economist at Princeton University. I think of him as consistently cheerleading on derivatives.

Arthur Levitt Jr., a former chairman of the Securities and Exchange Commission, says Mr. Greenspan opposes regulating derivatives because of a fundamental disdain for government. Mr. Levitt said that Mr. Greenspans authority and grasp of global finance consistently persuaded less financially sophisticated lawmakers to follow his lead.

I always felt that the titans of our legislature didnt want to reveal their own inability to understand some of the concepts that Mr. Greenspan was setting forth, Mr. Levitt said. I dont recall anyone ever saying, What do you mean by that, Alan?

Still, over a long stretch of time, some did pose questions. In 1992, Edward J. Markey, a Democrat from Massachusetts who led the House subcommittee on telecommunications and finance, asked what was then the General Accounting Office to study derivatives risks. Two years later, the office released its report, identifying significant gaps and weaknesses in the regulatory oversight of derivatives.

The sudden failure or abrupt withdrawal from trading of any of these large U.S. dealers could cause liquidity problems in the markets and could also pose risks to others, including federally insured banks and the financial system as a whole, Charles A. Bowsher, head of the accounting office, said when he testified before Mr. Markeys committee in 1994. In some cases intervention has and could result in a financial bailout paid for or guaranteed by taxpayers.

MORE


- They were warned......
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elleng Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 08:27 PM
Response to Reply #77
81. You are probably correct;
I'm sorry to learn that Levitt didn't pursue this; he had quite a lot of well-deserved stature.

I wonder what w's former treas secy Paul O'Neill would have to say/has to say about all of this. He's a smart one who w's bunch could not tolerate.
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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 09:24 PM
Response to Reply #81
89. Levitt was the only one....
...in the NYT article who expressed any regret for his stance against Brooksley Born back then. So I'll give him that much. But by this time, she was already chased away from government.

In early 1998, Mr. Rubins deputy, Lawrence H. Summers, called Ms. Born and chastised her for taking steps he said would lead to a financial crisis, according to Mr. Greenberger. Mr. Summers said he could not recall the conversation but agreed with Mr. Greenspan and Mr. Rubin that Ms. Borns proposal was highly problematic.

On April 21, 1998, senior federal financial regulators convened in a wood-paneled conference room at the Treasury to discuss Ms. Borns proposal. Mr. Rubin and Mr. Greenspan implored her to reconsider, according to both Mr. Greenberger and Mr. Levitt.

Ms. Born pushed ahead. On June 5, 1998, Mr. Greenspan, Mr. Rubin and Mr. Levitt called on Congress to prevent Ms. Born from acting until more senior regulators developed their own recommendations. Mr. Levitt says he now regrets that decision. Mr. Greenspan and Mr. Rubin were joined at the hip on this, he said. They were certainly very fiercely opposed to this and persuaded me that this would cause chaos.


Having worked in government, I can attest to how the system itself resists change and improvement. It stifles innovation and hates for the blatant truth to be exposed to the light of day. Because that tends to expose the deficiencies of those in-charge of decision-making.

But clearly in the case of money, one should be very circumspect when deferring authority and decision-making to someone soley based upon their reputation alone.

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elleng Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 10:36 PM
Response to Reply #89
94. I too worked in government,
Edited on Sun Oct-12-08 10:38 PM by elleng
and certainly agree with you; forget 'truth,' bow to whomever is 'king' of the day, regardless of consequences.

Levitt might have done more, but don't really know; maybe he tried; I believe he sought to honor basic purpose for SEC, to protect shareholders/public.
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lovuian Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 08:14 PM
Response to Original message
78. Greenspan Gramm Republican Congress all to blame for the
fall of US Empire

the TRUTH will service to the top

She is vindicated this day
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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 08:41 PM
Response to Reply #78
83. Yep.
But the hard part comes with making the changes we need so this can't happen again.

- Otherwise, what's the point?



    "Progress, far from consisting in change, depends on retentiveness. When change is absolute there remains no being to improve and no direction is set for possible improvement: and when experience is not retained, as among savages, infancy is perpetual. Those who cannot remember the past are condemned to repeat it. In the first stage of life the mind is frivolous and easily distracted, it misses progress by failing in consecutiveness and persistence. This is the condition of children and barbarians, in which instinct has learned nothing from experience."

George Santayana, The Life of Reason, Volume 1, 1905
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joebreak1 Donating Member (4 posts) Send PM | Profile | Ignore Sun Oct-12-08 08:23 PM
Response to Original message
80. a mess
Oh what a mess, a mess
how do we clean this dress?

And I do think the bed is wet,
can we clean it up just yet?

Will we mil about the slime
down with stocks, up with crime?

Is there a chance to regulate
if not by congress, state by state?

Gone are the paws licking honey
Enjoying all the easy money,

Now the bees buzz round and cling
The consequence, a mighty sting.

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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 09:34 PM
Response to Reply #80
93. Great poem/lyrics!!!
And welcome to DU!!!

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brentspeak Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 08:48 PM
Response to Original message
84. Well here, it wasn't just Repubs in Congress screwing everyone over
Edited on Sun Oct-12-08 08:52 PM by brentspeak
It was also some appointees (Rubin and Summers) of a Democratic president (Clinton) along with the bipartisan-approved Alan Greenspan who helped the disaster along. That's not to absolve the Republicans of their obvious wrongdoing -- Phil Gramm will be roasting in Hell alongside Alan Greenspan -- but there was DLC-complicity.
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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 09:28 PM
Response to Reply #84
90. And we should never forget that connection.
It was that DLC connection that wouldn't allow me to support Hillary in the Primaries.

- No good can ever come of Democrats emulating Repukes.
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Bryn Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 08:55 PM
Response to Original message
85. Great Find!
K&R

Thank you for this treasure find. I am bookmarking it. :hi:
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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 09:31 PM
Response to Reply #85
92. You're very welcome!!!!
:hi:

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Mr_Jefferson_24 Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-13-08 12:11 AM
Response to Original message
95. K&R. "The three marketeers' disdain for modest regulation...
Edited on Mon Oct-13-08 12:29 AM by Mr_Jefferson_24
...of new and risky financial instruments reveals a faith-based fundamentalist approach to the management of markets and risk."

That's just a nice way of crediting this nightmare to blind stupidity, when in fact, the cancer within Washington these three men epitomize is none so benign but rather, malignant, thoroughly widespread, and terminal.

No, what this actually reveals of the "three marketeers" is their willful participation in the engineered and purposeful destruction of our economy. Add it to the endless litany of confirmation we already have of what most of us already well know. Namely, that nearly all our elected representatives and high ranking government officials in Washington work, not for us (the citizenry), but for the Ruling Class.

Here's the template our beloved Ruling Class is using:

http://www.crisispapers.org/Editorials/germany-1933.htm

It is said that history repeats itself -- that's because it does.
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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-13-08 02:49 AM
Response to Reply #95
98. Your perspective on this is spot on.
Repealing Glass-Steagall, was like a bank taking the doors off their vaults and declaring they would now depend upon the honesty of employees (Wall Street CEOs), for the security of investor's and depositor's money.

Glass-Steagall was enacted to prevent the very thing these investment bankers have done now with "toxic derivatives," because they did the same thing with "bond shares" in 1929. Same thing, same scam, different name.

As for whom it is that "our" representatives work, a poster cited this at HuffPo:

http://query.nytimes.com/gst/fullpage.html?res=9A03E6DF...

President Clinton signed into law today a sweeping overhaul of Depression-era banking laws. The measure lifts barriers in the industry and allows banks, securities firms and insurance companies to merge and to sell each other's products.

''This legislation is truly historic,'' President Clinton told a packed audience of lawmakers and top financial regulators. ''We have done right by the American people.''

The bill repeals parts of the 1933 Glass-Steagall Act and the 1956 Bank Holding Company Act...
''The world changes, and Congress and the laws have to change with it,'' said Senator Phil Gramm...

''With this bill,'' Treasury Secretary Lawrence H. Summers said, ''the American financial system takes a major step forward toward the 21st Century -- one that will benefit American consumers, business and the national economy.''

What The Nation wrote / Nov 15, 1999:
For their money, the finance industry bought not only the end of the Glass-Steagall Act but also the partial repeal of the Bank Holding Company Act. These landmark pieces of legislation, RECOGNIZING THE INHERENT DANGERS OF TOO GREAT A CONCENTRATION OF FINANCIAL POWER, barred common ownership of banks, insurance companies, and securities firms... THE MISNAMED FINANCIAL SERVICES MODERNIZATION ACT WILL USHER IN ANOTHER ROUND OF RECORD-BREAKING MERGERS... concentrating financial power in trillion-dollar global giants AND PAVING THE WAY FOR FUTURE TAXPAYER BAILOUTS OF TOO-BIG-TO-FAIL FINANCIAL CORPORATIONS.


- Throughout human history, too much concentration of money into too few hands has never been a good combination. And I like they way Mark Twain put it, "History may not repeat itself, but it can rhyme."



And thanks for the link.... ;)
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Mr_Jefferson_24 Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-13-08 04:39 AM
Response to Reply #98
99. Thanks. I like the Mark Twain quote.
Edited on Mon Oct-13-08 04:47 AM by Mr_Jefferson_24
I can recall feeling bad for Clinton in the final months of his second term. The Rethugs had mercilessly ravaged his presidency from its inception, corporate media predictably went right along with it, and I always felt he didn't get enough help from the Dems in the House and Senate, or concerned citizens for that matter, in fending them off.

While his personal failings and willingness to engage in deception did bother me, I could get past it believing, at the time, that he did actually care about, and wanted to help, ordinary people.

I think I was mistaken.
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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-13-08 05:16 AM
Response to Reply #99
100. Having watched Bill Clinton's blooming career....
...begin as governor of Arkansas from here in Tennessee, I'd always seen him as an opportunist. A politician's politician. Were it not for his undeniable charisma, his policies would have otherwise been seen as liberal Republican down here. Particularly with regard to getting into bed with the corporations and social policy. He was an early founder of the Blue Dogs. And Hillary's foray into the 'ol boy network of Walmart did not endear me to either of them.

The Clinton's ideas was to undermine the split which Nixon initiated with his "Southern Strategy" in 1968 by mimicking certain issues that the more moderate to right-leaning Dems in the south could live with. Workfare, strong military and such like. But the result was a dilution to the point where Republicans in these same areas of the south began sounding like Clinton. That's how someone like a Jim Sasser, an erudite and learned Senator could be defeated by the likes of Lamar Alexander. Whose previous claim to fame had been Tennessee governor and before that a dentist.

What I've concluded is that the Clintons are extremely good at splitting the differences among the various segments of the electorate and playing them like a Stradivarius. They've always gotten enough to win, but the compromises they make to get those wins, made governing more a series of paybacks to the entities (corporations mostly) they're now beholden to. Which is where Obama (taking his cues from Dr. Dean), has split off from that paradigm and written new rules for politicking and raising money.

The problems that the Repukers face is that they don't have enough of their base who are net savvy. Hell, literate for that matter. All one has to do is venture over to Freeperville to see what I mean. So dumping the federal campaign system isn't a given for them to replicate. While Obama and future Dems who're taking note, will play the internets for all they're worth. After the crash of 1929 there was a wholesale change in the lineups in Congress. And I think that we need the same thing again. There are too many Dems who are now not only just too old to go in the directions and make the changes that we need to make, but who have colluded with Repukes to save their skins. At our expense.

Like the Clintons, I don't have a problem with doing what you need to do to get elected. Otherwise, all you've got is speeches and no way to implement your ideas. But there has to be some tipping point where one's identity is inviolable. Lacking that, they're almost as bad as the opposition.


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KewlKat Donating Member (867 posts) Send PM | Profile | Ignore Mon Oct-13-08 07:47 AM
Response to Original message
101. Born's testimony was Oct 1, 1998
here's the link to her testimony

http://www.cftc.gov/opa/speeches/opaborn-35.htm

1. Lack of Transparency

While the CFTC and the U.S. futures exchanges had full and accurate information about LTCMs on-exchange futures positions, no federal regulator received reports from LTCM on its OTC derivatives position. Indeed, no reporting requirements are imposed on most OTC market participants. This lack of basic information about the positions held by OTC derivatives users and the nature and extent of their exposures potentially allows OTC derivatives market participants to take positions that may threaten our regulated markets or, indeed, our economy without any federal agency knowing about it. Furthermore, there are no requirements that a hedge fund like LTCM provide disclosure documents to its investors or counterparties concerning its positions, exposures or investment strategies. A hedge funds derivatives transactions have traditionally been treated as off-balance sheet transactions, so even the annual financial reports filed with the Commission do not fully reveal its positions.

The OTC derivatives market has little price transparency, unlike regulated futures exchanges where bids and offers are quoted publicly and positions are marked to market daily. Lack of price transparency may aggravate problems arising from volatile markets because traders may be unable accurately to judge the value of their positions or the amount owed by their counterparties. Lack of price transparency also may contribute to fraud and sales practice abuses, allowing OTC derivatives customers to be misled as to the value of their interests.

As the Commission has suggested in its Concept Release, questions about the need for reporting, recordkeeping, disclosure and price transparency in the OTC derivatives market should be addressed.

Her conclusion:

Despite the immediate and pressing need to address these and related regulatory issues, Congress is about to restrict the Commission in doing so. Congress is about to adopt the so-called Financial Markets Reassurance Act of 1998, which was attached to the agriculture appropriations bill in Conference Committee earlier this week. That bill would prohibit the CFTC from proposing or adopting any new regulations relating to OTC swaps transactions until March 30, 1999, except in limited circumstances. The CFTC is currently the only federal agency with statutory authority over hedge funds like LTCM and over a significant portion of the swaps market. To tie its hands during this time of economic instability and growing awareness of the potential dangers in the swaps market could pose grave risks to the American public.

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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-13-08 07:18 PM
Response to Reply #101
112. Thank you for this.
From what she is saying here, what Congress also failed to realize is that without reporting requirements, we would not have a way to ascertain how much in earnings that any given hedge fund actually generated in any tax year. Making this one other area where we're left dependent upon the honesty of Wall Street CEOs, to report how much they made to the IRS. Since most of these transactions were "off-balance sheet transactions" they could make up any damned number they want. Who could challenge them?

I believe that I know what pieces of dung the likes of Gramm and Greenspan intended with this law. But I don't know what the hell other Congressional Reps were thinking when they let this pass. Because generally speaking, they've always love tax money.

- But of course, its not nice to go to Congress and suggest that Wall Street is full of a bunch of unpatriotic tax-cheats, now is it???
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Broadslidin Donating Member (949 posts) Send PM | Profile | Ignore Mon Oct-13-08 08:31 AM
Response to Original message
102. Do You believe, these male Mo-lochs, all in bed with Ayn Rand, have any regret for the misery caused...
the lower :freak: class...?
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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-13-08 07:22 PM
Response to Reply #102
113. Why hell no!!!
Its the whole point of existence for these tunnel-vision loonies to undermine and weaken government. From my reading of Ayn Rand, and granted this has been decades ago, she only saw a role for government to protect capitalism through military might if need be, as its only legitimate role.

- The rest of her "philosophy" such as it is, is all Yo-Yo.....

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antimatter98 Donating Member (537 posts) Send PM | Profile | Ignore Mon Oct-13-08 11:32 AM
Response to Original message
103. Rubin is an economic adviser to Obama. :( n/t
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beachmom Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-13-08 11:37 AM
Response to Reply #103
105. That is true, but I do not think Rubin will be influential the way he was in the '90s.
He does know a lot of things, but his vision was dead wrong, and I am sure Obama knows this.
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Horse with no Name Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-13-08 12:57 PM
Response to Reply #105
107. Do you really believe that?
Washington is incestual.
Those folks that have an inside track with obama OWE it to this country to get obama to fire that traitor.
Political incest is why we are in the mess we are in. The same folks that brought us Iran Contra brought us this mess.
Bad boyfriends don't change their stripes...and NEITHER do bad politicians.
INSIST that obama fire that traitor.
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nolabels Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-13-08 03:20 PM
Response to Reply #107
111. It looks like a bunch of dead bodies thrown under the rug
They tell the people with this so called accumulated wealth not to get riled up, they will figure it out. This with the wink and nod that they better do it otherwise the unwashed masses will figure out how fraudulent this whole economic system is. Gawd you can't expect workers and real contributers to societies well being to get paid what they are worth and earn.

I think the cat is out of the bag, it make take a while longer, maybe years. But just like all these religious fanatics have to deal with the story of evolution, they money changers will have to figure out why a thing like the internet and it's parts will always be one step ahead :nopity:
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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-13-08 07:25 PM
Response to Reply #103
114. Yes.
I was reminded of this recently. And I believe so is Lawrence Summers. This is the "stinky" part of politics that made me leave government 20 years ago.

- I can only hope that they won't end up with any cabinet-level positions.
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Imagevision Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-13-08 11:37 AM
Response to Original message
104. Obama - Mccain -M$M deem this to be a non-story?
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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-13-08 07:36 PM
Response to Reply #104
115. At this point....
...I think both campaigns are concentrating on issues that will bring the undecideds over to their camp. Given the complexity of these economic issues, and the tangled web that has been woven in getting here, its a non-starter. The candidates are looking for easy to understand sound bite topics that relate directly to people's lives.

Too many "average" Murkins, are so far removed from all this, that they cannot see, nor understand that their predicament today, is most likely the direct result of the actions of these pricks. So most just lump all of Wall Street together. As for the MSM, they're just whores (with a few notable exceptions), whose only concern is $$$. So for them, explaining derivatives is a sure way of getting people to turn the channel, or fall asleep. So both Obama and McCrapper are forced to stay with the simplistic messages. And talking derivatives right now, just won't cut it.

- But later, after Obama wins the election, who knows...
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