TODAY'S NEWS NJ Frontline Documentry Video of the week: THE WARNING

Alan Greenspan, Lawrence Summers and Robert Rubin


"We didn't truly know the dangers of the market, because it was a dark market," says Brooksley Born, the head of an obscure federal regulatory agency -- the Commodity Futures Trading Commission [CFTC] -- who not only warned of the potential for economic meltdown in the late 1990s, but also tried to convince the country's key economic powerbrokers to take actions that could have helped avert the crisis. "They were totally opposed to it," Born says. "That puzzled me. What was it that was in this market that had to be hidden?"

In The Warning, veteran FRONTLINE producer Michael Kirk unearths the hidden history of the nation's worst financial crisis since the Great Depression. At the center of it all he finds Brooksley Born, who speaks for the first time on television about her failed campaign to regulate the secretive, multitrillion-dollar derivatives market whose crash helped trigger the financial collapse in the fall of 2008.

"I didn't know Brooksley Born," says former SEC Chairman Arthur Levitt, a member of President Clinton's powerful Working Group on Financial Markets. "I was told that she was irascible, difficult, stubborn, unreasonable." Levitt explains how the other principals of the Working Group -- former Fed Chairman Alan Greenspan and former Treasury Secretary Robert Rubin -- convinced him that Born's attempt to regulate the risky derivatives market could lead to financial turmoil, a conclusion he now believes was "clearly a mistake."

Born's battle behind closed doors was epic, Kirk finds. The members of the President's Working Group vehemently opposed regulation -- especially when proposed by a Washington outsider like Born.

"I walk into Brooksley's office one day; the blood has drained from her face," says Michael Greenberger, a former top official at the CFTC who worked closely with Born. "She's hanging up the telephone; she says to me: 'That was [former Assistant Treasury Secretary] Larry Summers. He says, "You're going to cause the worst financial crisis since the end of World War II."... [He says he has] 13 bankers in his office who informed him of this. Stop, right away. No more.'"

Greenspan, Rubin and Summers ultimately prevailed on Congress to stop Born and limit future regulation of derivatives. "Born faced a formidable struggle pushing for regulation at a time when the stock market was booming," Kirk says. "Alan Greenspan was the maestro, and both parties in Washington were united in a belief that the markets would take care of themselves."

Now, with many of the same men who shut down Born in key positions in the Obama administration, The Warning reveals the complicated politics that led to this crisis and what it may say about current attempts to prevent the next one.

"It'll happen again if we don't take the appropriate steps," Born warns. "There will be significant financial downturns and disasters attributed to this regulatory gap over and over until we learn from experience."

Steve Phillips Fired by ESPN [UPDATE]

Steve Phillips, whose affair with ESPN staffer Brooke Hundley was exposed last week, has been fired from ESPN. This email arrived at 8:26 pm from ESPN PR:
Steve Phillips is no longer working for ESPN. His ability to be an effective representative for ESPN has been significantly and irreparably damaged, and it became evident it was time to part ways.

Initial reaction: Steve Phillips was on shaky ground when the story broke Wednesday (if you were out of the country/in a coma, get up to speed here), and we thought he’d survive. But Friday’s revelations that Brooke Hundley filed a restraining order against the Baseball Tonight analyst, combined with the “out-of-court settlement” turned the situation into another Harold Reynolds saga. Phillips is believed to have had two years left on his contract at ESPN.

To those who will ask, “Why fire a guy for sleeping with this chick? Who cares? What does that have to do with his analysis of Joe Girardi’s late-game pitching management?” … here’s a guess:

a) ESPN desperately wants/needs to shake the frat house culture that has become increasingly evident in the last decade
b) The inter-office romances featuring a guy in a position of power (on-air talent) and someone way down the totem pole open the company up to sexual harassment lawsuits.

Obama's Luster Tarnishing

If the recent fundraiser for Massachusetts’s Governor Deval Patrick is any indicator, Obama’s luster may be wearing off. The event was nowhere near a sellout, and word on the street is that operatives were pimping tickets up to the very last minute of the event. Worse yet, they weren’t finding any takers.

You’d think that with all the contacts on Obama’s crackberry, he could scare up enough “friends” to sell out a governor’s fundraiser?! The lack of participation by Bostonians is simply no way to treat a Nobel Peace Prize winner! Teddy Kennedy, the ugly cousin of LiberoFascism is rolling over in his grave!


The event was held at the Westin Copley, occupying the entire 4th floor--a venue that easily holds about 2000 people. Based on my radio producer’s report from a source who spoke to a cousin of a man who knows a friend of one of the maids said, “There was plenty of room for “disco dancing!” For journalistic integrity, we were able to confirm this with a taxi driver, who knows the sister of one of the vendors, who did overhear the concierge confirm this with his mother-in-law.


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A year ago a venue the size of the Westin Copley would not have been considered for such an event, if the messiah was to be in attendance. They would have planned on a stadium, Wembley Stadium most likely…New England game be damned! And even that would not have been big enough, so they would have had to simulcast it on big screens. And even that would pale. Thus Liberals would have clamored to see the spectacle on Pay-Per-View! Read more here...

Conservatives Outnumber Liberals 2-1

Conservatives continue to outnumber moderates and liberals in the American populace in 2009, confirming a finding that Gallup first noted in June. Forty percent of Americans describe their political views as conservative, 36% as moderate, and 20% as liberal. This marks a shift from 2005 through 2008, when moderates were tied with conservatives as the most prevalent group.

The 2009 data are based on 16 separate Gallup surveys conducted from January through September, encompassing more than 5,000 national adults per quarter. Conservatives have been the dominant ideological group each quarter, with between 39% and 41% of Americans identifying themselves as either "very conservative" or "conservative." Between 35% and 37% of Americans call themselves "moderate," while the percentage calling themselves "very liberal" or "liberal" has consistently registered between 20% and 21% -- making liberals the smallest of the three groups.
Unfortunately, many of those mushy "moderates" are liberals pretending to be moderates, likely too ashamed to admit how hard left they are.

Now if only the Republican Party would wake up and start supporting conservative candidates instead of these weak-kneed RINOs. Much of the promising news from this polls shows a trend of independents moving to the right, which does not bode well for the Democrats as we enter the 2010 election cycle.

Wall Street Follies: The Next Act

By GRETCHEN MORGENSON
NYT

It certainly sounded good.

Hoping, perhaps, to persuade a dubious public that curbing reckless business practices is indeed a Washington priority, the Obama administration and Congress produced a hat trick of financial reforms last week. The outlines of a consumer financial protection agency emerged from the House Financial Services Committee. The House Agriculture Committee spelled out ways to regulate risky derivatives trading, and the United States Treasury’s compensation czar announced his plan to rein in runaway executive pay at seven companies that, in total, have received hundreds of billions of dollars in taxpayer help within the past year.

Not to be outdone, the Federal Reserve announced plans late Thursday to review pay practices at the nation’s largest banks. It all left the question, would it make Wall Street safe for America?

For all the apparent action in Washington, some acute observers say that it was much ado about little. Last week’s moves, they say, were tinkering around the edges and did nothing to prevent another disaster like the one that unfolded a year ago.

(More here.)