Knowledge Makes It More Interesting

There is a really interesting situation unfolding but I’m not sure the aviation crowd is going to catch how it involves them. Granted, it is very indirect. Yet it is important when you consider what deregulation has done to the airline industry. And what privatization is still trying to do to air traffic control. (Not to mention airport screeners.) Stick with me.

There is another one of those boring government commissions at work -- the Financial Crisis Inquiry Commission.

”The Financial Crisis Inquiry Commission (FCIC) is a ten-member commission appointed by the United States government with the goal of investigating the causes of the financial crisis of 2007–2010. The Commission has been nicknamed the Angelides Commission after the chairman, Phil Angelides. The Commission has been compared to the Pecora Commission, which investigated the causes of the Great Depression in the 1930s, and has been nicknamed the New Pecora Commission. Analogies have also been made to the 9/11 Commission, which examined the September 11 terrorist attacks.”

The commission is getting ready to issue its report but it is split along (surprise!) ideological lines. So...the Republicans on the commission issued their own report before the commission’s report is due to come out.

According to the Huffington Post...

”During a private commission meeting last week, all four Republicans voted in favor of banning the phrases "Wall Street" and "shadow banking" and the words "interconnection" and "deregulation" from the panel's final report, according to a person familiar with the matter and confirmed by Brooksley E. Born, one of the six commissioners who voted against the proposal.”

I assume you caught “deregulation” in all that. The obscure knowledge that makes that quote so interesting is Brooksley Born’s background. You may remember I tried to get you to watch a PBS show -- Frontline: The Warning.

The “warning" was that financial derivatives were dangerous. The person giving the warning? Brooksley Born. In 1998.

”Born was appointed to the CFTC on April 15, 1994 by President Bill Clinton. Due to litigation against Bankers Trust Company by Procter and Gamble and other corporate clients, Born and her team at the CFTC sought comments on the regulation of derivatives, a first step in the process of writing comprehensive regulations.”

”CFTC regulation was strenuously opposed by Federal Reserve chairman Alan Greenspan, and by Treasury Secretaries Robert Rubin and Lawrence Summers” (If you don’t know those folks, follow the links at Wikipedia and read about them. Especially Summers.)

And, as confirmation on what we already know...

There are four Republican appointees on the commission. Half come from our friends at the American Enterprise Institute.

Bill Thomas -- ”In 2007, after leaving the House, Thomas joined the American Enterprise Institute...”

Peter Wallison -- ”is a lawyer and the Arthur F. Burns Fellow in Financial Policy Studies at the American Enterprise Institute.”

S.O.S.D.D.

As always, thanks to Professor Krugman for getting me started.

Don Brown
December 16, 2010