What’s the worst that could happen?
[Start the video at the 16th minute for the story]
There’s a marvelous story in this hour long FRONTLINE documentary called “The Warning” about the woman who warned of the coming financial collapse.
It was the the late 90’s and while media manipulators of internet stocks proclaimed that “Santa Claus arrives early on Wall Street,” the tech bubble continued to inflate. Alan Greenspan, then chairman of the immensely powerful Federal Reserve, told Brooksley Born, the head of an obscure small federal regulatory agency – the Commodity Futures Trading Commission – that he didn’t think the government should regulate fraud.
As Born challenged Greenspan’s orthodoxy on financial derivatives – the complex toxic financial products now blamed for the sub-prime mortgage meltdown and the resulting financial collapse of 2008 – the story quotes Greenspan as saying “We’re never going to agree on fraud … you probably think there should be rules against it.”
“He thought the market would figure it out.”
In hindsight it seems as though the faith the public held in their illustrious financial wizard and the wizard held himself in the efficacy of his own magic potions, isn’t much different than that of religious fundamentalists. But to what god were they praying?
