On April 7, 2010, the so-called Cassandra of the Crisis of 2008, and the woman who both relentlessly tried to stop it from happening in the first place only to have her career destroyed, faced one of the men who not only was responsible for the Crash, but also her professional ruin at a hearing on Capitol Hill. Brooklet Born, former head of the CFTC or Commodity Futures Trading Commission, a dedicated civil servant and lawyer with a star studded academic and government career, faced Alan Greenspan, and declared his tenure at the head of the Federal Reserve an unmitigated disaster to his face.
To those who believe that revenge is a dish best served cold, Ms. Born certainly got her just deserts, a decade late, although those in power had two previous warnings that she was right – one right before they stripped her of her power, and one in 2001 when Enron went belly up. Today of course, everyone knows she was also absolutely right, although she personally and many other Americans paid a high price for the tone deaf ears of two previous administrations and Congress for the last decade. Not to mention the appointments and economic decisions being made by THIS administration.
It was under Greenspan’s watch as head of the Fed that both Sarbanes-Oxley, the Depression-era anti-trust law breaking up the huge banks that caused the Depression of 1929 was repealed, but that unregulated derivatives were set free in the financial world to wreak their future destruction. It was also under Greenspan’s watch that the regulatory agencies, particularly those meant to oversee the financial markets and firms, essentially went from merely snoozing at the financial switches during the Clinton years to full blown narcolepsy.
The agencies Greenspan was responsible for overseeing and setting policy for, also failed to prevent the housing bubble (many have argued that his monetary policies caused it, along with Bush’s failure to diversify the economy and invest in America’s infrastructure), failed to prevent the predatory lending scandal, and ultimately caused the conditions which led to the economic meltdown of 2008. (Dayen, 2010)
In reality, it was a little more complicated than that, although Washington loves both soap opera and scapegoats, despite the fact that Greenspan certainly played a leading role in all of the above. As did his successor to the post who Obama just renominated to the post, despite some very big problems with Bernanke’s performance, even just since Obama took office. This includes the policy of allowing what many are calling essentially the Fed allowing legal theft by Wall Street of taking riskless, no interest loans to recapitalize itself while making huge profits through its policies.
And the cover-up and lack of transparency of the agency itself, which is coming out in small pieces of information, however shocking. One of those is the fact that despite the administration’s claims that the banks are on the road to recovery, it has come to light, that the “too big to fail” Wall Street Banks are undercapitalized and hiding those losses, as much as 30-40%, from the public. (Kelly, McGinty, Fitzpatrick, 2008)
This combined with lack of any action to restore Glass-Steagall, or break up the mega banks, not to mention a major push for significant wide sweeping financial reform is what led to the President of the Kansas City Federal Reserve, the longest serving, voting member of the policy section of the Fed, and a highly respected member of America’s financial elite, recently coming forward and demanding major change.
When something like that happens, you know that Washington is not doing its job. When somebody like that, a majorly respected, senior member of the establishment comes forward in such a public way, it is a sign that the culture of white collar crime has taken over government, and that government, along with Wall Street is made up of the same class of white collar criminals who are destroying this country.
Another key player in the meltdown was a man by the name of Robert Rubin, a former Goldman Sachs executive, who became Treasury Secretary under the Clinton Administration and was instrumental in destroying Glass-Steagall, paving the way for the creation of the mega-banks, including Citigroup, a bank he went to work for as chairman of the executive committee after his career as a “public servant” came to an end in 1999.
His compensation for such arduous work in the private sector was $126 million spanning the next eight years – or $43,000 per day. To quote Matt Taibbi of Rolling Stone Magazine, for explaining what seems like outright bribery if not conflict of interest in this transition, "they don't call it bribery in this country when they give you the money post factum. " (Housel, 2010).
While Barack Obama made a big deal about “no lobbyists in government” as he ran for the Presidency, there is no doubt about the fact that he has fundamentally failed as President, particularly in even addressing the financial crisis, by who he hired as his senior economic advisors and team to deal with the mess they inherited. And far from “change you can believe in” Obama in fact just followed the same pattern as his predecessor. If not has engaged in duplicity as bad as the Wall Street criminals he says, in his pretty speeches, he is supposedly going to regulate and cut down to size.