Skip to main content

"The Committee to [Screw] the World"

In 1999, Alan Greenspan (Chairman of the Federal Reserve), Robert Rubin (Treasury Secretary for the Clinton Administration) and Lawrence Summers (Rubin's deputy secretary) were dubbed on Time Magazine's front cover as "The Committee to Save the World". Ironically, just a year before that, the trio made a decision that should have earned them the moniker "The Committee to SCREW the World"

In 1998, Brooksley Born, chairwoman of the Commodity Futures Trading Commission, began to notice the rise of a new economic instrument called the "derivative". A derivative is "a financial instrument which derives its value from the value of underlying entities".  Noticing their complexity and thus the greater likelihood that they could be used for high speculation and fraud, Born determined that her CFTC would begin regulating the use of derivatives.
Before the end of that day, Greenspan, Rubin and Arthur Levitt, then-chairman of the Securities and Exchange Commission, put out a statement saying they had “grave concerns about this action and its possible consequences” and they “seriously question the scope of the CFTC’s jurisdiction in this area.”
Greenspan, Summers, Levitt and Born testified at a congressional hearing in July of that year, with the three men warning that the CFTC proposal could hurt financial markets and put the legality of existing derivatives contracts in doubt.
In 2000, Congress passed the Commodity Futures Modernization Act.  In the new law, derivatives were specifically prohibited from being regulated.  This mistake was a major contributor to the 2008 crash of the US and world economies.

Bloomberg writes that
The global OTC derivatives market mushroomed to a notional value of almost $600 trillion in 2007 from about $28 trillion at the time of Born’s proposal. [this ballooning of derivatives] include[d] the toxic instruments that ravaged AIG and Lehman Brothers. Those decisions helped set the stage for the worst global recession since World War II, with aftershocks that are still being felt from Washington to Athens.
We're still feeling it. We got screwed. And none of the Committee to Screw the World ever went to jail.

Comments

Post a Comment

Thank you for commenting. If you have a Google/Blogger account, to be apprised of ongoing comment activity on this article, please click the "Subscribe" link below.

Popular posts from this blog

What's Your Reaction to California's Decision on Same-Sex Marriage?

Yesterday a "Republican-dominated" California Supreme Court struck down state laws against same-sex marriages. The LDS Church issued a press release, calling the decision "unfortunate". I agree, but not for reasons you might think. Did the California Court make the right decision? Update 5/17/2008 : California decision does not affect prohibitions against polygamy and marriage of close relatives. Why not? Government should not sanction same-sex marriages for the same reason that it should not sanction heterosexual adultery--such activities tend to be destructive to the family as the fundamental unit of society. Before you get too far into reading into my words, let me echo and agree with something that Madeleine Albright wrote in her recent book, The Mighty & The Almighty (one of the better books that I have read in a long time): I oppose discrimination against gays and lesbians and am convinced that heterosexual adultery is a greater danger to the institu...
67 comments
Read more

The Inhumanity of Bob Lonsberry: Waterboarding, Concentration Camps, and the the Bataan Death March

KNRS 570 radio talk show host Bob Lonsberry advocated waterboarding and other forms of torture during his show on April 21, 2009. More grotesquely, he was beaming with pride about his advocacy campaign. It's difficult to imagine then, that, by the same rationale, had Lonsberry been a German at the time of Hitler, or a Japanese during the Bataan Death March, that he would not have advocated torture of Jews in the concentration camps or the bayoneting and shooting of American soldiers on the Bataan trail. Torture, Torture, Everywhere! Nearly 80,000 American soldiers were captured by the Japanese in the To contemplate a discussion about whether or not torture is legal or whether it even works, it is first required to come to the conclusion that 'I am a child of God, but my adversary is a monkey'. Phillipines in 1942 and forced to march with no food and very little water for six days. If a man stumbled, if he didn't respond quickly to a command, or if he tried to get wat...
50 comments
Read more

One Sure Thing about Global Warming: Loss of Liberty

In all of my reading about man-made global warming, never once have I come across the statement that 'we are absolutely sure' that mankind is causing irreversible global warming by our behavior. No one has dared make this claim yet. The closest anyone has come is being pretty sure that something bad might happen in fifty to one hundred years if we don't act now. One thing that several people have stated (on both sides of the debate), however, is that slowing the supposed effects caused by man on the warming of the globe will require significant strengthening of governments around the world, along with a significant reduction in your freedom to choose. My religion teaches You may think, from this article, that I am having a hard time separating my views of church from my views of state. That would be correct. that there was a great war in heaven between two ideologies. The first faction advocated our Heavenly Father's plan, which was a blueprint for freedom of choice...
51 comments
Read more