Frontline: The Warning (how reckless derivatives trading went on unimpeded)

Warning: Watching this episode of Frontline may (and should) make you sick to your stomach.

“The Warning” is a Frontline episode that aired this evening about derivatives trading and the demise of our economy. The main players were Alan Greenspan, Robert Rubin, and Lawrence Summers — all Ayn Rand disciples who believed that all regulation was bad. They honestly believed that the markets would regulate themselves, even after the Savings and Loan Scandal of the 80s. They even believed that fraud shouldn’t be investigated.

The “warning” was made back in the mid 90s by head of the Commodity Futures Trading Commission, Brooksley Born. The economy appeared to be humming along beautifully. The stock market was soaring. There was a huge surplus of jobs. We even had a balanced budget!

But it turned out, a cancer was growing. It was the completely unregulated derivatives market — a giant, multi-trillion dollar ponzi-scheme. Brooksley Born attempted to alert Congress to the pending disaster but was met with violent opposition by Greenspan, Rubin, Summers, and most of Congress. Not only was she not allowed to regulate the markets, her power to do so was taken away. And the market was further deregulated with the Financial Services Modernization Act of 1999 and the Commodity Futures Modernization Act of 2000 and the

Less than 10 years later, our economy completely collapsed.

But the really sickening thing about this story is, some of the people who caused the collapse of our economy are major players in the Obama administration. Lawrence Summers is now the director of the White House’s National Economic Council for Obama. Timothy Geithner, a disciple of Robert Rubin, is now the head of the Treasury Department.

Robert Rubin became Director and Senior Counselor of Citigroup during which time he earned more than 126 million dollars for his eight years of “service.” Citigroup has received 45 billion dollars from the TARP bailout money.

A lot of people have been ranting about our country becoming socialized. This seems more like corporatism to me. Something needs to be done.

First of all, we need to get rid of Geithner. Geithner and Rubin were both Goldmann Sachs alumni, which should have eliminated them from consideration in the first place. Maybe this Brooksley Born should head the Fed. She was one of the few people bright enough to see the impending disaster. And she actually tried to do something about it.

Watch the Frontline episode here .