FCIC Insider: “I Can’t Believe They Suborned Brooksley Born”

The Financial Crisis Inquiry Commission released its report yesterday and went into PR overdrive. Journalists and the public are still digesting the weighty document, and various tidbits, like the report that Goldman did indeed profit from the AIG rescue, are touted as news when the basic facts were already in the public domain.

What is troubling about the report is the manner in which it hews to conventional wisdom. Its ten major findings are hardly controversial, yet they are still insufficient to explain why the financial system seized up and appeared close to failure. And telling a familiar-sounding story assures that the status quo will remain unchallenged, and serves to validate the inadequate reforms now underway. After all, they are premised on the very same superficial beliefs.

I participated in a blogger conference call with FCIC commissioners Phil Angelides and Brooksley Born. I’m clearly not cut out for public life. It was disconcerting to hear them thumping their talking points. For instance, Angelides began by saying that the purpose of the report was to explain why we faced the choice in 2008 of spending billions of dollars to bail out the financial system or let it fail.

That’s a false dichotomy that serves to justify the unprecedented rescues. It implies that the only way the crisis could have been addressed was the course of action taken. We pointed out as the crisis was unfolding that some of the early interventions made matters worse. Even at the peak of the crisis, a range of other actions were possible but were not taken. The bias throughout the crisis was to throw money at the problem with virtually no strings attached, and even in the cold light of day, to take far too little in the way of corrective and punitive measures.

But the stunning part were Angelides’ and Born’s answers to my questions. I’ve been in communication with several disaffected insiders. And contrary to the efforts of Born and Angelides to depict critics as the dissenters (meaning the Republicans), these observers feel the investigation was inadequate and the report excluded critical drivers of the crisis. They have told me in some detail about how the staff performed its work in a vacuum. They reported that the commissioners spent virtually no time with the team leaders, did not provide input into the thinking process or interviews. They also complained of poor resource allocation decisions: that nearly 2/3 of the staff time was taken up with arranging and preparing for the public hearings, which were not terribly productive. And to add insult to injury, the staff prepared questions for the hearings only to find the commissioners ignoring them.

Another problem area was the difficulty in getting subpoenas issued. The process was made difficult by design; it took sign off by commissioners of both parties. As a result, nearly all the document production was voluntary. In litigation, it is common practice in discovery for the target of a document request to stonewall and argue with the judge that the demand is overly intrusive, costly, etc. so as to wear down the other side and get the request trimmed back to as great a degree as possible. Here, with the commission having a very tight schedule to begin with, stonewalling would be a rational strategy, and my sources tell me that happened on a widespread basis, particularly after the firms under the spotlight began to see that subpoenas were unlikely to be issued.

When I said I understood the document production was voluntary and asked why more subpoenas weren’t issued, I got party line: the firms had cooperated because they understood subpoenas would be forthcoming, and when firms like Moody’s and Goldman did not play ball, they were used. They contrasted their 19 subpoenas issued with three by the 9/11 commission (hardly a gold standard of investigation).

Born stressed how many pages were produced (ahem , quantity is not tantamount to relevance), how this undertaking was even larger than the complex litigations she had overseen, and how much staff effort went into analyzing the material. I then asked how much time the commissioners spent with the lead investigators and staff. Angelides said “a ton” and that it varied by commissioner, but that he and Born “dove in”. But if you listened carefully, they did NOT discuss how they worked with staff, but that they read memos, listened to interviews, and so on.

I called one of my contacts immediately afterwards and played back the exchange. The reaction: “I can’t believe they suborned Brooksley Born”. The insider disputed the account, saying that the commissioners did not give the staff any insight into their thinking nor did they participate in the interview process (either providing questions or participating in any interviews to get a feel for the process; listening to them afterwards or reading transcripts is just not the same). Others close to the investigation confirmed his report.

While Born was brave enough in 1996 to engage in a pitched battle with much more powerful figures in Washington to regulate credit default swaps and suffer a humiliating loss, she has not bucked the system in a more fundamental way. Her participation in the FCIC gave it an aura of respectability and seriousness. To see her defend a flawed process and product shows either a lack of discernment or a misguided sense of loyalty to a diseased system.

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  1. Ina Deaver

    This administration has been particularly good at using anyone who might have a whiff of respectability or honor left. While the Bush administration broke several people who were previously considered honorable, literally used them up like a soda and threw away the can, this one is practically making an art of it.

      1. sgt_doom

        “..her lesson..” Puuuhlease, as much as I applaud Esquire Born for attempting to do an honorable job as chair of the CFTC under the Clintonians, she simply left and went back to powerhouse law firm of Arnold and Porter (or Arnold Porter, they keep changing their names there).

        No whistleblower she.

        The true legal pioneering sisters who came before her in the legal profession would surely not have been proud of her performance.

        (And I speak as the descendant of one of them.)

        1. Parvaneh Ferhad

          Yes, that’s what I was trying to say. Obviously, she judged it to be in her own best interest to remain part of the system and play along instead of continuing to oppose it.
          It’s much more safe and can be very lucrative anyway.

  2. Thomas Barton, JD

    Yves, I am reminded of the character in Green Zone played by Matt Damon. If that movie is accurate even to a partial degree as to what that Chief Warrant Officer searched zealously and fruitlessly for, then you are the financial crisis inquiry equivalent to him. You are indefatigable and tireless and the powers that be know that they are beyond your reach. I hope that the ridiculous path of the EU will crunch one or more of the UK banks which will give further clarity to our banks role and as their portfolios fail then perhaps your voice will be given at least the same sort of power structure acknowledgment that the Matt Damon character got from that hard-nosed CIA mideast officer. I hope that that fictional reality in that film will ultimately find some solace for you in your relentless battle in this all too real fiancial super-quagmire. And don’t be too hard on Brooksley Born. Perhaps she has been worn down by the grinding of the Machine that is Wealth and Power well beyond most mortals ability to fight. Perhaps we can only hope for a major collapse to give you your hard-earned due.

  3. attempter

    For instance, Angelides began by saying that the purpose of the report was to explain why we faced the choice in 2008 of spending billions of dollars to bail out the financial system or let it fail.

    The purpose was to justify the Bailout? Now, that’s what I always thought, but it’s still interesting to hear them admit such things. Same as last summer when Treasury admitted the HAMP was a scam.

    I hope people who still believe in reform are keeping a tally of these “reformisms” which prove in the end to have always been scams. There sure is a long list by now. How many data points do people need to draw the curve?

    And the Brooksley Born sellout is yet another example of why we shouldn’t look to existing celebrities for “leadership”. Can we finally draw that curve?

    1. Paul Repstock

      These “honourable” people chosen as figureheads carefully. They are too close to the system to understand the real world implications of what they are doing. It is one thing to have integrity, it is quite another to be put in a position, where if you are too scrupulous in your activities, ‘it will be your name which colapses the house’.

      There are lots of honest people who will endanger themselves, they are incapable of making that decision for others. I suspect that is why the most sucessful politicians and leaders often appear sociopathic. “Damn the torpedos, full steam ahead”, is not something most of us could say??

      1. attempter

        There are lots of honest people who will endanger themselves, they are incapable of making that decision for others.

        They refuse to recognize:

        1. It’s the criminals who endanger us, and any result of any response to their crimes is still the result of the crimes.

        2. Therefore the greatest danger comes from doing nothing, and it’s those who implicitly or explicitly say “Do nothing” (including those who make misdirectional proposals) who are doing the most to endanger others.

        This action of Brooksley Born is the most endangering thing she could do. For her to condemn the thing as a sham would be the most healthy.

    2. Doug Terpstra

      Apparently Brooksley was Born again, perhaps chastened in Big Brother’s room 101. Elizabeth Warren too, if she is still alive, is in there currently undergoing re-education and co-optation. (Has anybody seen her?) The Consumer Financial Protection Agency, under the Federal Reserve, is bound to be a similar rubber stamp for the banksters.

      This beast is quite beyond reformation, and it is abundantly clear that nothing will change voluntarily or by normal “democratic” processes. Though it may be another year or two, eventually we will be forced to follow Tunisia and Egypt .

      1. Paul Repstock

        Don’t wish for that Doug. The reactions after the Arizona shootings show how itchy and polarized the country is. 150 years ago, with a much smaller population, you lost 600,000 Americans. I’m hoping the Global current for peacefull resistance can set the tone. Actually the Tunisians are doing very well. Boot a corrupt government, and when many of the same faces try to form a new gov. they are also sent packing..lol

        1. Doug Terpstra

          Don’t wish for what, a shooting rampage? I’m not hoping for violence, but I see the mostly peaceful protests and civil disobedience of Tunisia and Egypt as the only route to reform. As Chris Hedges, who chained himself to the WH fence a month back, stated, the normal democratic processes of voting, petitoning, etc., are fruitless.

          1. DownSouth


            The options are pacifistic non-resistance, non-violent resistance, and violent resistance.

            I found Dan Duncan’s and David Brooks’ attempt the other day to pervert MLK’s and Gandhi’s non-violent resistance into Tolstoy’s pacifistic non-resistance to be anything but amusing.

            This whole rewrite of history is to make Gandhi and MLK something less than the iconic revolutionary figures they were.

          2. Dan Duncan

            This is a reply to Downsouth.

            In my post, I made an offhand reference to a David Brooks’ article on Tolstoy to contrast art and economic modeling.


            At the end, I referenced Brooks’ concluding remark about activism. Specifically I used his remark to make a connection to George Soros as “The Activist”. Nowhere was Ghandi or MLK even mentioned nor contemplated.

            Downsouth, you really are a hard-worker. Typically this is a compliment, of course. But the problem is that you’re also quite dumb. [And I mean that literally, not in a nasty manner.]

            It’s a TERRIBLE combination, Downsouth.

            Obviously, there’s nothing you can do about your stupidity, but you do have control over your work-load. Instead of writing 10-15 posts day in and day out, just slow it down a bit. Take up smoking; get an X-Box. Don’t idle your days away cut and pasting Hannah Arendt quotes–that you don’t even understand.

            Sloth would be a much better compliment to your middling intellect…

          3. wunsacon


            >> In my post, I made an offhand reference to a David Brooks’ article on Tolstoy to contrast art and economic modeling. … Nowhere was Ghandi or MLK even mentioned nor contemplated.

            You brought up a Brooks article, Tolstoy, Soros, and activism. It isn’t a stretch to bring Gandhi and MLK into the conversation. Especially because Brooks talks about them in his articles and because talking about them helps DownSouth criticize Brooks’ theories.

            Dan, it sounds like you’re trying to wrong-foot DownSouth for not sticking to an agenda you prefer to define narrowly.

            >> Downsouth, you really are a hard-worker. Typically this is a compliment, of course. But the problem is that you’re also quite dumb. [And I mean that literally, not in a nasty manner.]

            This is silly, Dan.

          4. attempter

            I found Dan Duncan’s and David Brooks’ attempt the other day to pervert MLK’s and Gandhi’s non-violent resistance into Tolstoy’s pacifistic non-resistance to be anything but amusing.

            I didn’t see that, but did you see the Pentagon claiming that if MLK were here today he’d support imperial wars of aggression?


            But I guess in a cesspool where Jesus is claimed to support “capitalism” even though he said the rich were all going to burn in hell forever, that’s not surprising.

          5. Doug Terpstra

            Dan, thanks for the great Buddha belly-laugh; that was good for the diaphragm. Indeed, anyone who doesn’t find your posts amusing must be “quite dumb”.

          6. Karen Bernier

            @Dan Duncan

            I’ve been reading this blog for a long time and rarely feel the need to comment, but I find your ad hominem attack on DownSouth to be both offensive and outrageous. If you can make such a personal attack on DownSouth, accusing him of being “quite dumb” and having a “middling intellect”, and so forth, then it’s time for someone to call you out:

            Dan Duncan, based on every post of yours that I’ve ever read, I suspect you of being a right-wing reactionary, a racist, a tireless defender of the banksters, the rich and the status quo, as well as a self-serving cynic and a self-satisfied arrogant prick. What gives you the right to call DownSouth “quite dumb” and accuse him of having a “middling intellect”? While writing this garbage, do you have a perpetual superior smirk on your face like David Brooks? Because this is how I picture you.

            And based on every comment you’ve made so far, I assume that you also approved of the infinitely loathsome David Brooks in his recent finger-wagging sermon directed against the people of Haiti in which he admonished them that all of their suffering was their own fault:


            Furthermore, as far as I can tell, your only purpose for posting comments on this blog is in order to drag other people down, especially anyone attempting to do anything constructive or positive, or anyone who is not a corporate shill, a total cynic, or a right-wing reactionary.

          7. Michael H

            Karen, sounds like you’ve got Dan Duncan’s number. But it’s best to ignore him. He’s the puddle of dog vomit you try to step around. The turd that the burglar left behind on the living room floor, and you try not to step in it.

          8. Doug Terpstra

            I suspect Dan writes comments from his usual stool in a dimly lit Irish pub for soccer hooligans.

            Actually, I was feeling rather inadequate until I read his comment. Some of DownSouth’s posts, which I read religiously, go waaay over my head, challenging my own less-than-middling intellect. Alas, Dan says there’s nothing I can do about my stupidity, but it’s especially reassuring to know from him that DownSouth doesn’t really understand his own posts either :-)

          9. Patrice

            @Dan Duncan

            When it comes down to choosing sides between the dictator torturer Mubarek and his right-wing oligarcy versus the down-trodden Egyptian people, I think we all know whose side Dan Duncan will be on.

          10. Larry Elasmo

            Other than the one above, I haven’t read any of Dan Duncan’s posts, but assuming Karen and others are right and Dan Duncan really is a cynical right-wing reactionary, there’s no point attacking him personally over this. He’s simply a product of Capitalism, and Capitalism is like an assembly line that turns out cynical right-wing reactionaries by the millions. In no way is it the reign of freedom as our ruling elites would like us to believe.

            Capitalism offers nothing to believe in cynicism is its morality.

            Better to attack the Capitalist system itself, rather individuals made cynical by growing up under this particular economic system.

        2. Jason Rines

          I believe America will land more like Russia of today, mixed cabinets of power brokers and newcomers.

          The power brokers back down when it comes time to take firm action that requires consistent time, effort, measurement and refinement. Welcome to the next decade of no growth for the West, a lot of volatility and movement into reorganization. If we are fortunate, mankind will avoid another global war but I doubt it.

          Eventually power brokers get tired of no growth also and help fund reform. Note I said fund, not structure. The R&D work will be done by the newcomer politicians and innovators. The current structure and individuals are winding down the clock between now and 2013.

          2013 are the signals pointing to market reorganization. Expect tensions to increase all over the globe and more frustration of no growth translated into more boiling anger and unfortunately, more atrocities.

    3. DownSouth

      Yep. The way these guys massacre the English language is appalling. As you say, the invoking of the word “reform” now signals nothing more than a cynical scam to maintain the kleptocracy.

      Barack Obama, the US president, urged both the government and protesters to show restraint as they expressed their “pent-up frustrations”.

      “It is very important that people have mechanisms in order to express legitimate grievances,” he said as he answered questions from an online audience on the YouTube website.

      Obama also urged Mubarak to make changes to the political system to appease the angry protesters.

      “I’ve always said to him that making sure that they are moving forward on reform – political reform, economic reform – is absolutely critical for the long-term well-being of Egypt.”


      Human Rights Watch said Egyptian police had escalated the use of force against largely peaceful demonstrations, calling it “wholly unacceptable and disproportionate”.


      Safwat Sherif, the secretary-general of the ruling National Democratic Party, told reporters on Thursday: “We hope that tomorrow’s Friday prayers and its rituals happen in a quiet way that upholds the value of such rituals …and that no one jeopardises the safety of citizens or subjects them to something they do not want.”
      Egypt tense ahead of protests

      Rule by sheer violence comes into play where power is being lost; it is precisely the shrinking power of the Russian government, internally and externally, that became manifest in its “solution” of the Czechoslovak problem—-just as it was the shrinking power of European imperialism that became manifest in the alternative between decolonization and massacre.
      –Hannah Arendt, Crises of the Republic

      Nor is he [read Obama] likely to understand the desire to break the peace, because he does not fully recognize the injustices which it hides. They are not easily recognized, because they consist in inequalities, which history sanctifies and tradition justifies… A too uncritical glorification of co-operation and mutuality [again, read Obama] therefore results in acceptance of traditional injustices and the preference of the subtler types of coercion to the more overt types.


      Both the temper and the method of non-violence yield another very important advantage in social conflict. They rob the opponent [read Obama] of the moral conceit by which he identifies his interests with the peace and order of society. This is the most important of all the imponderables in a social struggle. It is the one which gives an entrenched and dominant group the clearest and the least justified advantage over those who are attacking the status quo. The latter are placed in the category of enemies of public order, of criminals and inciters to violence and the neutral community is invariably arrayed against them. The temper and the method of non-violence destroys the plausibility of this moral conceit of the entrenched interests. If the non-violent campaign actually threatens and imperils existing arrangements the charge of treason and violence will be made against it none-the-less. But it will not confuse the neutral elements in a community so easily.
      –Reinhold Niebuhr, Moral Man and Immoral Society

  4. Richard Kline

    The FCIC was theater, never intended to be anything other. That’s why 2/3 of its staff time, as you make plain Yves, was spent on organizing the theater for the camera. The function of the public hearings was to show that yes, the Powers That Be were ‘seriously looking at things.’ But quite obviously not interested at all in _finding_ anything. Just patting the proles on the head to communicate that this was all being done right and proper.

    Why the disinterest? Hey, Phil even laid it right out at the start; generous of him (or to save his time): ” . . . Angelides began by saying that the purpose of the report was to explain why we faced the choice in 2008 of spending billions of dollars to bail out the financial system or let it fail.” It was already told to the ‘investigators’ that the actions had been essential, End of the World/Steely Heroed TARP-throwing. Thus it was the job of the Commission to *cough* _sell the product_, not to review the design.

    —And the sell-out of the Commissioners is signature of America’s inability to reform itself, or in any way have our public figures confront the coporate lackeys they’ve become. Threatened with any perceived hazard to their privileges, careers, and revolving door payouts, the ‘chattering class’ cravenly clutches the script thrust in their hands and puts on a convincing face for the camers _even when they know the script is purest bullshit_. Becasue, to me, it’s the FEAR of losing their privilege that makes them crump out and clutch the corporate wingtip with both lips. “We’ll clean this thing up around the edges,” goes the whisper, ‘after the crisis has passed.’ “Don’t rock the boat.” “Keep a united front until after ‘the next election when we [whatever lie or illusion is current this week.'” We don’t have and faction capable of leading reform because they have ALL bought the current system; the only possible counterpoint, quickly suppressed, is merely to ‘make things run sort of better.’ When things CAN’T run better because criminals and delusionaries are running policy and have been for twenty years. No one named to a commission putatively to investigate ‘power’ or ‘sanctioned theft’ will do any such thing, their role is to manage perception.

    The ‘Fake’ Commission, dutifully read the script that folks like Emanuel and Summers shoved in their shirt pockets; that’s what they were there for. Some will go and collect their payouts (campaign cash). Some will go and try to make The Money Machine run a little more reliably. But they will go with their tails betwen their legs because that’s just how them came _in_ the door, as flak-cathers for our Society of the Total Lie . . . .

    1. Paul Repstock

      Richard. I understand your frustation. But, I would ask you a question: If some of the leaders stood up to this cabal, how much support ould they really get from the people? How big a part of the population would accept and endorse the chaos and resulting hardships(there would be hardships because these people have engineered it that way.)

      I don’t think very many would!

      Do you recall those few people who tried to stop the phony election? Nobody even remembers their names.

      1. DownSouth

        There always comes a point beyond which lying becomes counterproductive. This point is reached when the audience to which the lies are addressed is forced to disregard altogether the distinguishing line between truth and falsehood in order to be able to survive.
        –Hannah Arendt, “Lying in Politics,” Crises of the Republic

        1. Paul Repstock

          LOL..:(..We are pretty much at that point now aren’t we. I think that is one reason many otherwise intelligent folk have put their heads firmly in the sand, and say, “Wake me when it’s over”.

          1. DanB

            Who’s “we”? I assume that since the lower class and working class are thus far bering the brunt of unemployment and all the misery it brings most of the rest of “WE” are hoping it stops with them. Of course, this is attenuated on this website because it has some of the most thoughtful, critical and well-informed commenters around. I know brilliant people who remain captured in the mythology of the American Dream and Washington’s cherry tree.

            Most important, the unwind is now underway and ultimately beyond the control of perception meanagmeent -it’s about thermodynamics. we will, I think, have Hanna Arendt moment -when lies no lnoger work- for increasing segments of “We”/

          2. DanB

            Who’s “we”? I assume that since the lower class and working class are thus far bearing the brunt of unemployment and all the misery it brings most of the rest of “WE” are hoping it stops with them. Of course, this is attenuated on this website because it has some of the most thoughtful, critical and well-informed commenters around. I know brilliant and compassionate people who remain captured and increasingly confused by the mythology of the American Dream and Washington’s cherry tree.

            Most important, the unwind is now underway and ultimately beyond perception management -it’s about thermodynamics. We will, I think, have Hanna Arendt moments -when lies no lnoger work- for increasing segments of “We”.

  5. Toby

    We should just be ignoring this bullshit and signaling our disdain for TPTB and the status quo generally, by withdrawing all but the most cursory attention from them. Why the further analysis? Isn’t it crystal clear that the corruption has rotted the entire structure? How much evidence do we need? For how long can we continue to be disappointed by further evidence that corruption and decadence are rampant? This is silly now. Enough already. We need solutions, and they will NOT come from the status quo. They cannot. They are obliged to prove beyond doubt their willingness to change radically to earn being listened to again.

    Stop feeding the beast. Turn off your TV, don’t vote, and for those who are rich, consume as little as possible. This shit has got to go.

    1. Paul Repstock

      Yes Toby! We need a denial of service attack in reverse. Any interaction endorses their existence, and that includes violent confrontation. Ignore the bastards ell enough and they will dry up and blow away..:)

      1. DownSouth

        In 1896 he [Gandhi] had read Tolstoy’s Christian pacifist manifesto “The Kingdom of God Is Within You” and was “overwhelmed” by it. A few years later, he entered into correspondence with Tolstoy, who celebrated Gandhi’s work in “Letters to a Hindu.”….

        The example that inspired him most, however, was the Russian revolution of 1905, whose first stages were largely nonviolent. For some years, he observed in “Indian Opinion,” the Russian revolutionaries had resorted to terrorist attacks. He admired the courage of the attackers, including “fearless girls, actuated by patriotism and a spirit of self-sacrifice, [who] take the lives of those whom they believe to be the enemies of the country, and themselves meet an agonizing death at the hands of officials.” Nevertheless, their method was “a mistake.” Now they had discovered a new method:

        “This time they have found another remedy which, though very simple, is more powerful than rebellion and murder. The Russian workers and all the other servants declared a general strike and stopped all work. They left their jobs and informed the Czar that unless justice was done, they would not resume work. What was there even the Czar could do against this? It was quite impossible to exact work from people by force.”
        –Jonathan Schell,
        The Unconquerable World

        In my humble opinion, the ordinary methods of agitation by way of petitions, deputations, and the like is no longer a remedy for moving to repentance a government so hopelessly indifferent to the welfare of its charge…
        –M.K. Gandhi, from Speeches and Writings of M.K. Gandhi, Mardas Edition, 1919

    2. skippy

      It feels like the universe is sitting on your chest or is that just bankster et al ass squeezing the last of humanity out of my feeble self.

      1. Paul Repstock

        Re: above comments. Do you remember that “Tank a bank” thread, Skip?

        That is the sort of thing I’m advocating. The gov. probably wouldn’t even need to truck in money. The important thing is that if even 15-20% of people pulled their business from the TBTFF, they would be sitting like lumps. Just playing with themselves and each other (not so different from the reality now), But, it would show the people that the big banks aren’t essential??

        1. skippy

          I’ve already settled my affairs. I no longer trade on any exchange, converted every thing to moving forward assets, spend my time looking out for the family and helping put others as much as I can, only use one account to facilitate any necessary financial transactions, etc.

          Skippy…banks are just the cheep facade, too the real rot in the system, all the way down to the bedrock, we chip away at the edifice they have provided us, torment us with.

  6. psychohistorian

    How are popcorn futures looking?

    I wonder how sick and perverted this is really going to get. The direction is certainly downward and the pace is picking up. The black hole of American imperialism is failing from its own gluttony.

    Are there any morals left in the military? We can only hope that there is push back against the sociopaths use of nukes to keep this societal rape moving forward. I suspect we will know in a couple of years or less.

    The public was against the bailouts and they continue to try and sell that concept. I hope that they find it just makes the public more incensed by matters so things come to a conclusion sooner. I continue to be hopeful that society can learn from this and construct a more equitable and just world, given the chance.

  7. ex-PFC Chuck

    While Born was brave enough in 1996 to engage in a pitched battle with much more powerful figures in Washington to regulate credit default swaps and suffer a humiliating loss, she has not bucked the system in a more fundamental way. Her participation in the FCIC gave it an aura of respectability and seriousness. To see her defend a flawed process and product shows either a lack of discernment or a misguided sense of loyalty to a diseased system.

    Maybe it’s my Flyoverland cynicism at work, but could there be compromising photos involved?

    1. Paul Repstock

      Nothing should be discounted! These people play for keeps!

      In our polite and genteel “Western” mindset, most people are not equiped to deal with those who consider a few thousand civilian casualties as merely an inconvenience (for disposal if even that is necessary). We have been very fortunet to live in such a tame world. Most people don’t.

  8. avgJohn

    Maybe the investigation should have been conducted by a panel of people who “lacked the necessary self-control for success” in today’s social, political and business climate.

    I’m sure there are still a few troublemakers with the guts to act up and openly shout the fact that emperor is running around buck-naked. But you can be sure no one is going to hand them the public microphone. I guess that’s why more and more people turn to blogs such a NC for their information.

    Yves, I don’t always agree with you, but I do appreciate that you always try to tell the plain truth as you see it, and you can’t ask for more than that from a person. For that I thank you.

  9. Deus-DJ

    Perhaps what this really suggests is that Brooksley Born is not and HAS NEVER BEEN! the person we thought she was. Who’s to say she was trying so hard to regulate CDS and OTC derivatives? All she did was put a memo on whether we should. The fact that we never see her conduct interviews with the press suggests that maybe she wasn’t nearly as thoughtful or hard nosed on these types of issues as we had believed her to be. I always figured as much after listening to all the stories of her back in the late 90s and seeing as to how she never conducted interviews…and this only confirms my suspicions. We made her out to be something she never was.

    1. Siggy

      That comment reflects genuine perception. Full marks for that!

      Consider, she tabled it, got run over and then went her way. Better to make a living than endure self rightous martydom.

  10. Mondo

    The entry by Phil Angelides, suggesting that there was no other alternative than letting the financial system fail or bailing it out, very much reminds me of an appearance by Larry Summers back in October 2008, on FTN if I remember correctly. With great theater, i.e. a suitably horrified look, Summers started out by mentioning how troubled he was himself that these terrible bailouts had to be arranged, and then moved on without ever discussing alternatives. That is when the rewrite of history began for me.

  11. steelhead23

    After reading an essay on Modern Monetary Theory, which set out a logic string to argue that deficits and debts don’t matter as long as credit is managed to control growth and interest rates, I began to see the logic in the zero interest rate and QE programs of the Fed. Unfortunately, I see this as spurious logic – a logic trail that leads to a wholly illogical result. That is, much like to tautology that debts that can’t be repaid, won’t be, economies that can’t be sustained, won’t be and eventually this system will fail. The question becomes, how long can the global economy support a kleptocratic elite without imploding. My greatest fear is that it will be a long, long time.

    If We the People wish to end this process sooner, we will need to not merely pass laws to control the ongoing control fraud, we will need to enforce those laws and demonstrate a willingness to investigate, indict, and prosecute the miscreants. Unfortunately, Angelides is no Pecora and we are no closer today to this goal than we were a year ago. May tomorrow be brighter.

    1. Doug Terpstra

      Warren is assuredly undergoing deprogramming and re-education at the Ministry of Truth. If she survives, we will likely see a lobotomized, Stepford version of her emerge. I hope Yves is never nominated for public office.

  12. Hugh

    What a farce. I’m disappointed about Brooksley Born but was also concerned about her silence throughout the FCIC process. The contrast I would make would be with Bill Black. Bill Black has been out of the loop even longer than Born but he still remains pretty current on what’s what and who’s doing what to whom. I don’t know whether he would have accepted a position on this commission or not. A) They would never have asked him and B) as we see with Born, there are dangers to your reputation by associating yourself with a joke process. But I don’t think he would have been silent, like Born.

    Let’s face it too. We knew before this commission was ever named a lot of what caused the housing bubble and the meltdown. The frauds, the suborning of government, the neutering of regulation. We saw too subsequent events: the massive insolvencies covered up with the bailouts, government sanctioned cooking of books, the lack of any real reform, the retention in place of the largest banksters, their businesses, and their bonus system.

    What we were looking for from any investigation, the FCIC or another, was details on the cons, specifics about who did what and when.

    But we also knew we weren’t going to get this from the FCIC. The release of the FCIC report simply confirms this. What we are getting from Yves is the extent to which Angelides mismanaged the commission and members, including Born, just went through the motions on this one.

  13. DumpTheBankInfoJulian

    End this insanity and let’s throw the first brick through Dimon’s executive office, already!

    It looks as if the only people to demand these criminals pay is “We The People”…..

    I work for a brick manufacturer who needs some business…..

  14. TC

    I am not so sure that, “the choice in 2008 of spending billions of dollars to bail out the financial system or let it fail” is such the “false dichotomy” Yves believes is the report’s intention of creating.

    Just because trillions of dollars have been thrown at the problem does not change one whit the fact that, the financial system still is doomed to collapse. “A swindle has followed the swindle that brought collapse in 2008” is my impression of what the FCIC report concludes, all semantic hairsplitting and so-called dissent notwithstanding.

    Since the report concludes the 2008 crisis was foreseeable and preventable, does this not argue against your sense about it “[serving] to justify the unprecedented rescues?” Indeed, there seems to be agreement with your sense of matters on this account, rather than the contrary implication you suggest, “that the only way the crisis could have been addressed was the course of action taken.”

    Per matters of procedure and coordination wanting in the FCIC investigation, we’ll just tuck that away for the post-Glass-Steagall cleanup…

  15. Frustrated American

    When can we expect the government inquiry report on current business practices in foreclosure world? 5 years after the damage is done? The same entities who created the financial crisis are now profiting in the servicing/foreclosure business. Suffice it to say, corrupt business practices merely shifted from one platform to another. Wall Street, foreclosure mills, network attorneys, network closing agents, servicing companies, asset management companies and select title companies are working together to cover up their fraudulent business practices, including illegal referral fees and kickbacks.

    When we report the information/evidence to regulatory agencies, there is no response, inquiry or investigation. No surprise there! I’ll continue to collect evidence and report it to the authorities….

  16. NOTaREALmerican

    Re: Phil Angelides and Brooksley Born.

    HA! Why do people expect Party insiders to address problems caused by Party insiders.

    Jeeesh. The insanity of people’s hope that some of the Party insiders are “more worthy” than others is the root of the problem.

  17. mannfm11

    It just might be she isn’t who we thought she was. She was one of Hillary’s pals and that usually says enough. The Clinton’s are as good at grabbing the cash as any of them, if you recall the poverty defense fund and the sudden approaching $100 million in wealth since 2000. There is an Ivy League club in this country and there isn’t a lot of bucking that system by its members. The USA would be better off if the country east of the Hudson fell into the ocean.

  18. MIchaelC

    Sorry, I have to say I hate the headline and I think the ire towards BB is misguided.

    Without CDS there would not have been any Magnetar/Paulson trades. There would have been NO crisis without CDS. She was obliterated when she tried to prevent it. She was right. She had no political support then, has no political support now (suborned??), what more can be expected of her? She’s still right and its amazing to me she had the tenacity to even participate in the process. Her key points made it into the body of the report. That she lacks the political support to have had any influence on the “conclusions” is an Administration shortcoming, not hers.

    From the report:

    “According to market participants, CDOs stimulated greater demand for mortgage-
    backed securities, particularly those with high yields, and the greater demand
    in turn affected the standards for originating mortgages underlying those securities.”

    Your key point made it into the report.

    Furher down in the report:

    “Credit default swaps greased the CDO machine in several ways. First, they allowed
    CDO managers to create synthetic and hybrid CDOs more quickly than they
    could create cash CDOs. Second, they enabled investors in the CDOs (including the
    originating banks, such as Citigroup and Merrill) to transfer the risk of default to the
    issuer of the credit default swap (such as AIG and other insurance companies). Third,
    they made correlation trading possible. As the FCIC survey revealed, most hedge
    fund purchases of equity and other junior tranches of mortgage-backed securities
    and CDOs were done as part of complex trading strategies. As a result, credit default
    swaps were critical to facilitate demand from hedge funds for the equity or other
    junior tranches of mortgage-backed securities and CDOs. Finally, they allowed speculators
    to make bets for or against the housing market without putting up much cash”

    Not news to any of us following the story here but good to see it summarized in the report

    However, it was followed with this nonsense:

    “On the other hand, it can be argued that credit default swaps helped end the housing
    and mortgage-backed securities bubble. Because CDO arrangers could more easily
    buy mortgage exposure for their CDOs through credit default swaps than through
    actual mortgage-backed securities, demand for credit default swaps may in fact have
    reduced the need to originate high-yield mortgages. In addition, some market participants
    have contended that without the ability to short the housing market via credit
    default swaps, the bubble would have lasted longer.”

    As this crisis continues to expand the conclusions are going to be increasingly irrelevant and it will become overwhelmingly clear that deregulation of derivatives led to the proliferation of derivatives instruments that undermined everything they touched, including the plain vanilla, bread and butter lending products like mortgages.

    1. David Larsson

      I am grateful for YS and her work. NC is an invaluable source of information that it is not easy to get elsewhere, and YS has lots of credibility with me for that reason. This post damages that credibility.

      The word “suborn” means “To induce someone to commit an unlawful or malicious act, or to commit perjury.” I am not persuaded by this post that BB has committed any unlawful or malicious act, or that BB has committed perjury. I’m left wondering (a) why I am supposed to believe an anonymous disaffected FCIC “insider” is more intrepid and trustworthy than BB, who is, I’m sure, imperfect, but a better role model of a public servant than anyone else I can think of, off-hand, and (b) why would YS make the editorial decision to use that inflammatory verb.

    2. MIchaelC

      However ineffective she’s been, she’s consistamtly spoke truth to power.Where I live that takes brass. That’s her legacy. That’s hravery and she should be lauded. Shame on those that bullyed her. Shame on those still who mean to shut her up. Shame on us for expectinmg more from her than what she gave.

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