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Once upon a time there was a brilliant and courageous lawyer named Brooksley Born.  She is The Woman Greenspan, Rubin & Summers Silenced, who are also known as The Three Marketeers.

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.

Step over the fold to read more about our fair heroine and the 3 grizzlies, who bullied her from their chairs at the Dept. of the US Treasury & Federal Reserve.

Pictures of Brooksley Born and the 3 Marketeers on the cover of Time Magazine (thanks to kyril for this link) with the caption:

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.

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According the the NY Times, The Reckoning: Taking Hard New Look at a Greenspan Legacy

Ms. Born was concerned that unfettered, opaque trading could "threaten our regulated markets or, indeed, our economy without any federal agency knowing about it," she said in Congressional testimony. She called for greater disclosure of trades and reserves to cushion against losses.

Ms. Born’s views incited fierce opposition from Mr. Greenspan and Robert E. Rubin, the Treasury secretary then.

"Greenspan told Brooksley that she essentially didn’t know what she was doing and she’d cause a financial crisis," said Michael Greenberger, who was a senior director at the commission. "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, Mr. Rubin’s 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. Born’s 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. Born’s 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."

Ms. Born soon gained a potent example. In the fall of 1998, the hedge fund Long Term Capital Management nearly collapsed, dragged down by disastrous bets on, among other things, derivatives. More than a dozen banks pooled $3.6 billion for a private rescue to prevent the fund from slipping into bankruptcy and endangering other firms.

Despite that event, Congress froze the Commodity Futures Trading Commission’s regulatory authority for six months. The following year, Ms. Born departed.
In November 1999, senior regulators — including Mr. Greenspan and Mr. Rubin — recommended that Congress permanently strip the C.F.T.C. of regulatory authority over derivatives.

The moral to this story is that since Rubin and Summers were major meanie-pants to our fair and noble heroine, Brooksley Born, who was right about regulation, and Rubin, Summers, and Geithner were all for deregulation, which clearly was wrong, they should not still have the ear of President Obama or any chairs in the Treasury Dept.  

One of the principles of good governance, is that good judgment gets rewarded and bad judgement gets the boot.  This is why the American people elected Barack Obama president.

Why are the deregulators still calling the shots in the US Treasury after paving the way to this financial nightmare?  

Timothy Geithner, Lawrence Summers, and Robert Rubin were all in favor of deregulation, which is how AIG got into the hot water that has led to these hundreds of $ billion bailouts and hundreds of $ million bonuses to the undeserving dunderheads who got us into this mess.

What's worse is that Alan Greenspan, Larry Summers, and Robert Rubin, aka, The 3 Marketeers, were also guilty of muzzling the voice of reason that could have prevented this financial debacle from ever occuring in the first place.

Call your Congressman and Senators

Toll free Capitol Switchboard: 1-800-828-0498

and President Obama

White House Comment line:  202-456-6213 and White House comment webpage

and tell them to kick the beasties, Timothy Geithner, Lawrence Summers (his behavior toward Ms. Born answers his own question about why women have a difficult time succeeding in male dominated fields), and Robert Rubin out of the US Treasury before our country is bled bankrupt and hire back Brooksley Born and bring in nobel laureates Joseph Stiglitz and Paul Krugman, who have good judgment and lack conflicts of interest with Wall Street, to advise us on how to bring this grim tale to a satisfactory and ethical conclusion, so that we can all live happily every after.

The End.

Originally posted to Cindy Casella on Mon Mar 16, 2009 at 03:13 PM PDT.

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