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In recent days both the Washington Post and the New York Times have lionized Brooksley E. Born, who during her 1996 to 1999 tenure as head of the Commodity Futures Trading Commission (CFTC) pushed to regulate the trading of derivatives. “A decade ago, long before the financial calamity now sweeping the world, the federal government’s economic brain trust heard a clarion warning and declared in unison: You’re wrong,” a Post article from today opened.”
That “clarion warning,” said the story, was issued by Born and was “met with hostility” by Federal Reserve Chairman Alan Greenspan, Treasury Secretary Robert E. Rubin and Securities and Exchange Commission Chairman Arthur Levitt Jr. – “all Wall Street legends, all opponents to varying degrees of tighter regulation of the financial system that had earned them wealth and power.”
If there’s a silver lining to the economic crash, it’s seeing stuffed shirts like Greenspan and Rubin have their reputations brought down to earth. But the current hagiography of Born is a bit ironic, given that her “clarion warning” seems to have been pretty much ignored by the press back at the time, when it mattered.
During her heroic three-year stint as head of the CFTC, the New York Times mentioned Born’s role there 17 times, according to a Nexis search. Seven of those mentions came in filler items that noted her appointment or departure from the agency.
There was very little detailed coverage of Born’s struggle to regulate derivatives trading. Instead, there was the usual “fair and balanced” coverage in which all points of view are given equal weight, making it impossible to draw any informed conclusions.
Typical was a Times piece on May 8, 1998, “A Federal Turf War Over Derivatives Control.” It quoted Born as saying, “What we’re doing is trying to ascertain whether our own regulations remain appropriate, given the changes that have occurred in the market over the last five years.” That was followed by a counterpoint position from an executive at J .P. Morgan & Company. Banks and other financial institutions “opposed tighter regulation of the market, arguing that such changes threaten to crimp innovation and drive the market offshore,” the story summarized.
Coverage at the “Post” was similarly sparse and neutered. “Born’s supporters, including some members of Congress, believed she was willing to stand up to the likes of Federal Reserve Board Chairman Alan Greenspan and Treasury Secretary Robert E. Rubin,” read a 1999 piece that noted her retirement from the agency. “Born’s detractors saw her suggestions as an attempt to grab more regulatory authority for her agency.”
I might have missed something, but I couldn’t find any editorials from either of the newspapers applauding Born’s efforts at the CFTC. And incidentally, Born’s name does not appear in the index of Bob Woodward’s 2000 book, “Maestro: Greenspan’s Fed and the American Boom.” Nor does the word “derivatives.”
The subtitle of today’s Post piece describes it as “the story of how Washington didn’t catch up to Wall Street.” But the media didn’t do a very good job of keeping up either.
Update: A reader, Luca Menato, just alerted me to Born’s Wikipedia entry. It effectively begins with the Times story about her from last week.
More from Ken Silverstein:
Commentary — November 17, 2015, 6:41 pm
The Clintons’ so-called charitable enterprise has served as a vehicle to launder money and to enrich family friends.
Number of people who attended the World Grits Festival, held in St. George, South Carolina, last spring:
The brown bears of Greece continued chewing through telephone poles.
In Peru, a 51-year-old activist became the first former sex worker to run for the national legislature. “I’m going to put order,” she said, “in that big brothel which is Congress.”
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“Civilization masks us with a screen, from ourselves and from one another, with thin depth of unreality. We habitually live — do we not? — in a world self-created, half established, of false values arbitrarily upheld, largely inspired by misconception, misapprehension, wrong perspective, and defective proportion, misapplication.”