Lecture Notes for Apr 27, 2010

Notes from video: Frontline ? Trying to protect the money of the american public: {Born} ? Allen Greenspan: The wizard ? Everyone hung on his word ? Chairmen of the federal reserve ? Appointed by Reagan ? Bob Rueben ? Had credibility because he was a business success ? Worked with Greenspan when Clinton asked him to stay on ? Larry Summers ? Also worked with them both ? They were the committee to save the world ? Brooksley born ? First woman to be an attorney ? Became friends with Hilary Clinton ? Then Clinton become president ? she interviewed with Clinton but she was not chosen ? Instead run the CFTC: Commodity futures trading comission ? Greenspan and Born clashed over Fraud ? Summer: Calls Born and tells her to stop before she creates the biggest financial crisis ever. ? Derivatives: Swaps between banks ? Fraud:Bankers trust employee sold derivatives ? Took advantage of the fact that they were too difficult to understand. ? People thought it was in their best interest but it cleaned them out ? Born's warning was passed over ? She had no chance ? She wasn't a member ? She had no support ? Her Warning had become a prophecy ? John Meriwether ? Creto: Markets get it right ? LTCM: Long time capital management ? Did business with 15 big banks ? The complicated computer models failed ? To fix the crisis: 14 banks had to put up millions ? This is an unregulated market ? Congress stopped Brooksley entirely: She in turn resigned ? Derivatives were doing well ? Profits were on the up