Last night while lying in bed I turned on the TV and got a snippet of PBS Frontline. It was describing how a woman named Brooksley Born, who was just appointed head of a minor financial agency, the Commodity Futures Trading Commission [CFTC], had been summoned by The Wizard, the Chairman of the Federal Reserve to a meeting.
The description of the meeting, not refuted, was described as Greenspan, starting with, "I assume that you are in favor of preventing fraud" to which Ms Born responded affirmatively. At that point Greenspan retorted that she was wrong, that the market would take care of it, and no laws were necessary.
Knowing the outcome of this story, I turned off the television and attempted to go to sleep. But, I didn't have much luck (that and watching one more episode-my last,I promised myself-of the violent idiotic "24") Only this morning did I go in the computer and watch the entire episode, entitled "The Warning" which I recommend to all.
The Frontline website is far beyond anything on the internet, as is the television report. I will use excerpts from the transcriptto fill out some of my comments:
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MICHAEL GREENBERGER: That was her introduction to Alan Greenspan.
NARRATOR: The clash with Greenspan didn't intimidate Born. She was determined that her agency would investigate fraud at the first opportunity. One are that caught her attention was a new and highly lucrative market, over-the-counter derivatives.
JOE NOCERA: She starts to realize that there's this whole world out there of what are called over-the-counter derivatives that are essentially unregulated. It's not even that they're unregulated, it's that the government doesn't even know what's going on.
This one hour documentary, covering events now pretty well known, is both an explication of history, political power, and the ideology of one woman, Ayn Rand, that was formed out of a distorted antipathy towards Communism that turned all of government control into evil. And that incredibly. a member of the inner circle of her anti regulatory cult, turned out to be in control of the largest economy the world had ever known, with the ability and stated desire to work "inside the system" to fulfill her mission.
To be clear what this was I will excerpt from the transcript.
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JOE NOCERA, The New York Times: Greenspan is a disciple. She is the great champion of government as a destructive force that just gets in the way.
MIKE WALLACE, 60 Minutes: Can I ask you to capsulize your philosophy?
AYN RAND: I am opposed to all forms of control. I am for an absolute laissez-faire, free, unregulated economy. Let me put it briefly. I am for the separation of state and economics.
NARRATOR: Greenspan talked about Rand in his autobiography.
[Alan Greenspan, The Age of Turbulence: "Ayn Rand became a stabilizing force in my life. It hadn't taken long for us to have a meeting of the minds mostly my mind meeting hers."]
NARRATOR: Rand stood in the Oval Office as her star pupil was sworn in.
Although Greenspan was first appointed by President Reagan in 1987, he was reappointed by G.H.W. Bush, Clinton and G.W. Bush. The focus of the Frontline program was how one woman, Brooksley Born, did everything humanly possible to counter a mentality of unrestrained speculation, the fruition of wildest dreams of Ayn Rand. It describes her battle with a triumvirate in the Clinton Administration, Greenspan, Rubin and Summers. And as a part of this group not yet at the top was Timothy Geithner.
The final segment of the program brings us to the current moment, when a bill that would restore what had been seen as rational limits, controls and transparency on the institutions and instruments that almost brought the economy to ruin (we hope,"almost")is now being stalled. While Geithner claims innocence, and Larry Summers claims to be a convert to regulation, just what is the message to have these two men who abetted the economic bubble, and then it's bursting, as the leaders of reform.
Meanwhile, the one person who foresaw exactly what the ultimate results of this would bring remains out of public life. It is Greenspan who was awarded our nations highest honor, the Medal of Freedom, while, at least before this program, Brooksley Born was unknown to the public.
I only hope that our President happened to have caught this program.