Alan Greenspan, also known as “the Wizard” for his
outstanding knowledge of the economy or at least his appearance of knowing all
that he knew. Greenspan was an economist in the White House working with five
presidents. He was well known and had renowned thoughts along with his
committee members Summer and Rubin. Theses prominent men had similar views
about Wall Street, essentially that the less government regulation the better.
This made for an inevitable clash with Brooksley Born.
Born wanted to investigate the unregulated derivatives on
Wall Street. The CFTC first found out about these large loans of money from
Proctor and Gamble. But it was difficult to investigate because there was no record-keeping
requirement. Overall, the market for derivatives was not well understood and
only the people involved knew what was going on. By 1998 when the economy was
booming, Greenspan, Rubin and Summer didn’t see the investigation to be
necessary. When Brooksley tried to stop derivatives, the committee put out
information to newspapers and congress saying they shouldn’t trust Brooksley.
They lobbied hard, and congress believed them so no regulations were set. 
Brooksley Born resigned and years later the economy collapsed
with derivatives being a main point. Once a woman described as stubborn and
difficult was know known as committed and dedicated. To this day Greenspan
admits he was wrong and he had a flaw in his model of hands off.
No matter who is to blame for not listening to Born when she
tried to regulate derivatives it’s unfortunate that nobody did. It’s also
depressing to think the fact that she was a female had something to do with
this. The economy and the business world is definitely not as male oriented but
men still play the dominant role.
No comments:
Post a Comment