Brooksley Born, former head of the CFTC and now a member of the Financial Crisis Inquiry Commission, finally had her chance to stick it to Chris Cox.
Born, remember, was the only member of the President’s Working Group on Financial Markets in 1998 to call for comprehensive regulation of OTC derivatives like credit default swaps.
Cox, then a member of Congress and the chairman of the Task Force on Capital Markets, vehemently opposed the regulation as did Alan Greenspan, Larry Summers and Robert Rubin. Well, we know what kind of havoc unregulated OTC derivatives have caused since then.
Cox, testifying today in front of the FCIC, conceded it was probably a turf battle between the SEC and the CFTC that caused him and others to completely write-off Brooksley’s suggestions. “I’ve had the chance to review the debates we had,” Cox told Born at the hearing. “There was a lot of pride of brand at both the CFTC and the SEC” and the failure to take Born seriously “flowed from an our team is better mentality.”
Cox also blamed turf battles between various Congressional committees for missing the chance to regulate OTC derivatives. “Congress was incapable of regulating on the subject,” he told the commission.
Update: Paul Wilkinson, a former SEC staffer who worked under Cox, has pointed out that Cox never opposed derivatives regulation. As a member of Congress, he did not express a view one way or the other on derivatives regulation. That didn’t come until 2008, when then SEC chairman Cox urged Congress to regulate derivatives. We regret the mischaracterization of Cox’s views.
You’re U.S. Government property. You’re a malfunctioning $30 million weapon. You’re a total goddamn catastrophe, and by God, if it kills me, you’re going to tell me how this happened.
-Conklin
I’d hit it
Do we all know what kind of havoc unregulated OTC derivatives have CAUSED, Kouwe? Do we?
Slow.News.Day. It’s high time we tear this Zach kid a new one. Why has he not retreated in fear like that other tool they brought on last year?
Who gives a fuck about this article? I just creampied your mom while reading this Kouwe. Her vagina is leaking on a printed version of this article. GTFO
Nice work OptionTrader. You can tell which articles are Bess v Kouwe-ait before even reading the headline – this kid kills the humor angle of DB. I think I’m gonna go read ARSorkin instead of DB, maybe at least DealBook can make me laugh with the news instead of at it’s reporters
Mrs. Lincoln: The stars are not aligned; let’s stay home and watch a video.
Abe: You are a whacko; we going to the theater.
@5/Kouwe
Who do you think you’re talking to, hoss? You are possibly the worst “journalist” I’ve ever encountered, at least in large-scale media. When was the last time you wrote a 1,500 word article without “sourcing” it from a competitor?
http://www.theatlantic.com/business/archive/2009/11/the-media-is-wrong-about-goldman-sachs-aig/30565/
I’m not a vindictive person, nor am I claiming to be a master wordsmith or journalist, but seriously, don’t you think its astoundingly obvious at this point that a career switch is the best choice for everyone?
You fucking suck Kouwe.
@Kouwe
Also, since I’m actually a pretty nice guy and I have nothing personally against you (I actually hear you’re a pretty cool guy, too), I’ll even help you to educate yourself on OTC Derivatives. Here’s a good starting point from a professional:
http://derivativedribble.wordpress.com/2010/03/18/credit-default-swaps-are-not-the-problem/
The derivatives themselves are not the problem. Morons who don’t know how to properly and safely use them without blowing themselves and others up, are. This, of course, is to say nothing of the utterly regulatory failure that enabled the issues to get so out of hand, but that’s another conversation for another time.
^utter, not utterly, whatever.
Pooey, that pic is NSFW. I can’t model with a semi-chubber
And Kouwe, I forgot to add, if you’re free Friday night I’d love to buy you a drink at B. Jimmys (BJs) and explain my thoughts and insights.
And maybe you will see that you and I aren’t that different. Then, I’d like to take you home and have you make sweet love to me.
@11 I still don’t see the argument why it would be a bad to move CDS to an exchange, if only for the vanilla ones.
For issues that are thinly traded, you don’t need whole lot of capital to make a move in the CDS market and that will in turn have impact on the much larger MV of the underlying. Underlying + CDS = rf + counterparty premium.
Chris Cox was a useless at the SEC, but is that really saying much anyway?
@15 look who’s quietly trying to kill the idea & how they treat you.
The broader arguments are on cost, diclosure, “slippery-slide” risks and control.
-not 11
The worst has yet to come and we have not learnt anything yet. We do have enough laws, it is a matter of execution. Chris Cox and SEC were our biggest failures.
I watched with great interest the Frontline PBS “the warning” Itwas shmafull how they treated Ms born at the congressional hearings DURING CLINTONS 2nd term When things went from bad to disasterous about the begining of Obamas election. Still he was obligated by partison politics to hire Sommers, Geitner. Rubin had the street smarts to stay at Bank of America that he has almost singlehanded run into the ground. If I remember correctly Obama bailed them out to the tune of 50 Billion plus as political payback for his Clinton years. He was probably the architec for our current financhial problems. Greenspan had the good sense to get out while the getting was good. I wish I had a job for 30 + yrs and all he did was move the interest rate up or down, boy that was great work. Bush was told everything was coming up roses until they could not hide it fro him anymore, or the public. Hedge funds are nothing more than another version of the Ponsey scheme. After awhile you can’t lie enough to keep people investing, then it collapses. Now the Democrats want to just shrug their shoulders and say soory about that. Greenspan said its up to the investor to decide if something is good or bad idea. Right after he andClinton and hid money grabs have said the sky is the limit. The American way has been you have the right to succeed or fail based on your decisions. Unfortunately for the taxpayor Obama did not let Bank of America go under, same for Freddie mac/ Sallie.
I rember well when Clinton signed legislation eliminating the Fed law that had been in place since THE GREAT DEPRESSION, remember that one? Before there was a law that stated that all lending insitutions had to maintain 10% of stated assets in liquid form. Even at first glance anyone could see that that was a safeguard aginst what happened then as well as now. So who is responsible for the majority of the current financhial delima, Bill Clinton, Greenspan, Geitner, Sommers, and last but by no means least Rubin now CEO Bank of America
Dr. Julian Fields