Remember Brooksley Born, former head of the Commodity Futures Trading Commission? In the late 1990s, Born sensed trouble was coming to a $25-trillion derivatives market. She pushed to strictly regulate derivatives under the Clinton administration, but lost the battle because she found herself on the wrong side of then Federal Reserve Chairman Alan Greenspan, Treasury Secretary Robert Rubin, his deputy Lawrence Summers, and Securities and Exchange Commission head Arthur Levitt.
To say Born's warnings were ignored would be an understatement. The gurus of the U.S. economy "dark markets" went after her.
Looking back on that time, Born told the Washington Post, "I was concerned about the lack of transparency and the lack of any tools for enforcement and the lack of prohibitions against fraud and manipulation."
Greenspan, of course, famously argued that there wasn't a need for a law against fraud because the market would take care of fraud on its own. Born recalled Greenspan's perspective as follows: If a broker engaged in fraud, customers would find out and stop doing business with him.
The dark market defenders went to battle against Born in 1998, fighting to block a concept paper she had prepared. Born prevailed and released the document, but was immediately labeled a "rogue regulator." Soon thereafter, Long-Term Capital Management, a huge hedge fund that bet heavily on derivatives, nearly failed and had to be bailed out by a group of banks.
Instead of offering Born an apology and thanks, the "Oracle" Greenspan and his crew lobbied Senators to place a moratorium on the power of the CTFC. They won. Born did not seek reappointment. And large-scale fraud, as we've since come to know it, was given free rein.
After the financial disaster was well underway, Born acquainted Greenspan with the fact that as Fed Chairman he had "failed to prevent the housing bubble, failed to prevent the predatory lending scandal, failed to prevent the activities that would bring the financial system to the verge of collapse." His response was essentially that sometimes he is wrong but he is right more often.
Today, given President Obama's hemming and hawing about appointing Elizabeth Warren to head the Consumer Financial Protection Bureau, it's not far-fetched to think that history could repeat itself. Another woman trying to break the old guard's economic chokehold could be shown the door.
Warren has compared predatory bankers and brokers to "financial wizards" who "loot from middle class families." She is not intimidated by Timothy Geithner. Nor is she naïve, as some claimed Born was, about the politics of Washington. Therefore, she is likely to be a "loose cannon" by Geithner's standards -- and that's not President Obama's favorite type of person either.
If the financial overseers do pull a "Brooksley Born" on Warren, they will be overestimating their own power and underestimating both the acumen and the power of Americans who supported President Obama in the past. They will also be turning their backs on those striving to join the middle class and those struggling to remain there.
If President Obama fails to appoint Warren -- or if he appoints her and his cronies render the Consumer Financial Protection Bureau powerless, he will lose the next presidential election.
Millions of Americans, and perhaps especially American women, will not stand idly by and let the establishment savage Warren, her skill, integrity and willingness to defend those not able to so aptly defend themselves.
Kathleen also blogs at bardscove.
Sen. Jeff Merkley: Elizabeth Warren Is the Right Person for the Job
I for one would be willing to consider a grass roots attempt to take back the Democratic Party. Unless a miracle occurs, it doesn't look like Obama will win a second term. Although unprecedented, I think the Dems should start looking for someone else.
I do not think any third party would win. In fact, it would be more likely to throw the election to the Republicans. Remember Nader in 2000? Al Gore won the popular vote and he lost the election due to the Supremes' intervention. However, if Nader hadn't run, there wouldn't have even been an issue in FL, assuming the Naderites would have voted for Gore. Also, look at Perot. Or even Roosevelt's Bull Moose Party.
Anyways, if Gore had carried his own state of Tennessee, he'd have won, regardless.
I actually saw Greenspan make the inane comment that the thought that the "markets" would correct for "fraud." As someone who has worked in the financial markets for decades, I almost fell out of my chair. He was either lying or is ensconced in an Ivory Tower.
This whole concept of "market correction" is absurd. Wall streeters are amoral. The only thing they care about is the bottom line. These evil geniuses concoct "structured finance vehicles" that are really just fraudulent hoaxes when you dissect them. However their creators don't see themselves as the fraudsters they are. These people are very smart and motivated by money. They need to be policed as they have no internal policeman (morals).
And, they need to be policed by people who are as smart as they are. Not, the SEC buffoons that Madoff blew off. We need about 1000 Elizabeth Warrens to police this crowd. But I would be thrilled to have even one at the head.
Elizabeth Warren wants to protect the middle class and has stated what the Banks are doing wrong and wants regulations changed to protect us.
also, this mess is squarely CONGRESS's fault - they are the ones who dereg'ed the market and allowed there to be no income standards whatsoever for buying a home. clinton did this under the premise that homeownership would increase wealth, but it didn't work that way and the system was abused and mortgages were given to people who should never have gotten them.
also, as much as i despise him, bush sent representatives to congress a half dozen times during his time in office to warn congress about the impending housing failure; one of them being alan greenspan, but congress only cared about the next election (as usual) and did nothing.
And we see how that has worked out.
And now we're in a second Depression..except for the wealthy, so I guess that's OK since, someday, we'll ALL be rich and we won't want to pay those pesky taxes either!
Nobody seems to want to face reality and begin repairing this mess. We're all complicit if we continue with this charade.
=As a member of the "professional left," I reached my "last straw" with President Obama's
feckless, if not hypocritical, approach to corporate regulation long ago. But, for progressives who are still hanging in there, reluctant to give up on what they perceive as the last, best hope of an America not totally controlled by the mega-corporations and their stooges in Congress, President Obama's failure to appoint/confirm Elizabeth Warren as head of the CFPB would mean that even these wishful thinkers would, finally, have to recognize reality.
=That's why, as the article points out, the White House will probably try to make it appear that they want Elizabeth Warren to get the Consumer Financial Protection Bureau job, but will look for some
bureaucratic "escape clause" to blame for her ultimate rejection. As supporters of the late, lamented "public option" well remember, making progressive initiatives (and people) disappear, is a Rahm Emanuel specialty!
Remember how Obama & the Corporate Democrats kept baiting & switching us
on the Single Payer Option, and set it up for the Dems to cover their butts
while they killed the SPO.
I would love to see her get the job & raise some hell
but I know the guys in the smoke filled rooms will either bait & switch or neuter her.
"They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob."
-Franklin Delanor Roosevelt, 1936 Madison Square Garden
Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me—and I welcome their hatred.
"We know now that Government by organized money is just as dangerous as Government by organized mob."
When the POTUS speaks, I hear FRUSTRATION, a little SARCASM, and a whole lot of PATIENCE.
I would expect by now, he would have LOST his patience and shown some OUTRAGE at what has been done to SO MANY hard working Americans ......I HAVEN"T heard that yet. It's beginning to worry me.
At some point, SOON, I NEED to hear INDIGNATION ! I want to see some OUTRAGE, I want to see HEADS ROLL OUT and NEW BLOOD come in.
AND, if these guys ( and I say guys because any woman in the Senate who puts the KIBOSH on E. Warren, does so at their peril) do her like BB, then we might as well forget about anything good happening for the PEOPLE, cuz the FIX is in and they're ALL IN ON IT.
You make a key point about one of Obama's main failures: "O'Bama needs to be willing to go down in flames" We have yet to hear Obama make a speech like democratic president FDR once made (and likely never hear):
"They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob."
Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me—and I welcome their hatred.
-Franklin Delanor Roosevelt, 1936 Madison Square Garden