Brooksley Born was chairperson of the CFTC from 1996-’99 under President Clinton.
Born had all the experience one could ask for in such a post. She was the first female president of the Stanford Law Review.
She worked as a lawyer specializing in derivatives at her former-firm. Yet, ultimately her campaign to regulate these contracts was denied by Robert Rubin, Larry Summers, and Alan Greenspan.
We know that unregulated derivatives played a key role in the crisis. They’re at the heart of the TBTF problem.Watch PBS’s excellent documentary The Warning for more.
Geithner plays the role of Rubin
Now Tim Geithner, Rubin’s protege, is trying to block the appointment of Elizabeth Warren as head of the new Consumer Financial Protection Bureau.
Coincidence warning: Warren’s competitors for the job include another Bob Rubin protege, Michael S. Barr. He served as special assistant to the Mr. Rubin, and as Deputy Assistant Secretary of Treasury.
Huffington Post broke the story on Geithner’s opposition to Warren. Their source is reportedly “familiar with Geithner’s views”. Excerpt:
Warren’s persistent oversight is part of the reason for Geithner’s opposition, according to the source
We shouldn’t be surprised to learn that Geithner fears a regulator who “persistently oversees”. The horror.
The Agency Warren Should Lead
Elizabeth Warren should be the clear front runner to head the CFPB. In 2007 she wrote a paper titled Unsafe at Any Rate, which strongly influenced to new agency’s creation. She’s the most knowledgeable, honest, and motivated candidate we have.
Yet Geithner, sworn to serve the American people as Treasury Sec. doesn’t want her in the post? Some guesses as to why:
- She’s a lawyer who understands the complex issues at hand.
- She seems determined to enact real change in America’s broken TBTF banking system.
- She’s smarter than him.
- She asks questions that make Tim squirm, as seen below:
Denying Mrs. Warren this chance would be a historic mistake.
She knows what needs fixing in our broken financial system, especially as it relates to TBTF banks. Banks that are massively subsidized by ultra-low interest rates, lax capital requirement, and guarantees both implied and explicit.
The new agency will exist under the Fed. Obviously, that’s not ideal. But it’s all we have at this point. Having Warren in there to keep an eye on the boys would be a huge step.
I got the chance to see Elizabeth Warren speak at last year’s Buttonwood conference. She is sharp as a tack and asks all the right questions. Unlike most other speakers, she didn’t shy away from criticizing banks. Here are a few quotes:
The reason banks lost confidence in each other is because they looked at their own books. (in reply to a question about cross-exposure among banks).
What we have confidence in is the fact that big institutions will be bailed out. (in reply to a question about the importance of economic confidence).
At the time (Oct ’09), I wrote:
Unfortunately, Mrs. Warren’s position is toothless; her role has no enforcement authority, after all.
This would prove to be a recurring theme throughout the conference. The speakers with the best ideas were usually in no position to act on them. Power-players like Summers and Geithner said little of substance, dodging the best questions.
Let’s not allow Elizabeth Warren to become the next Brooksley Born. If you want to get involved, contact your local representative and let them know you support the nomination of Elizabeth Warren as head of the CFPB .
hat tip Shahien Nasiripour @ HuffPo