What if Washington Listened When Brooksley Born Sounded Alarms About Unregulated Markets?

Shortly after she was named to head the Commodity Futures Trading Commission in 1996, Brooksley E. Born was invited to lunch by Federal Reserve Chairman Alan Greenspan.

The influential Greenspan was an ardent proponent of unfettered markets. Born was a powerful Washington, D.C., lawyer with a track record for activ­ist causes. Over lunch in his private dining room at the stately headquarters of the Fed in Washington, Green­span probed their differences.

“Well, Brooksley, I guess you and I will never agree about fraud,” Born, in a recent interview, remembers Greenspan saying.

“What is there not to agree on?” Born says she replied.

“Well, you probably will always believe there should be laws against fraud, and I don’t think there is any need for a law against fraud,” she recalls him saying. Greenspan, Born says, believed the market would take care of itself.

For the incoming regulator, the meeting was a wake-up call. “That underscored to me how absolutist Alan was in his opposition to any regulation,” Born says.

Over the next three years, Born would learn firsthand the potency of those absolutist views, confronting Greenspan and other powerful figures in the capital over how to regulate Wall Street...

Continue reading the full story, "The Born Prophecy" in the May issue of the ABA Journal.