I too watched “The Warning” (unsolicited) and found it fascinating. I concur that Ms. Born is a true Patriot and devoted public servant. It is very unfortunate that the Higher Ups in the Administration didn’t heed her advice and allow her proposed oversight regulations to go forward. While it may not have stopped the finanical collapse of LTCM it MAY have mitigated the meltdown in 2008-09.

A couple of notes;

“Derivatives” cover a very complex segment of the investment and CREDIT world. The concepts behind derivatives aren’t “sinister” nor are the actual derivatives themselves; they are an extremely complex (at least to the laymen) form of twisting and sometimes packaging spreads and credit issues. There’s nothing illegal about them – it’s just another method of “selling” paper that represents money somewhere else. Some brilliant economists came up with the ideas. There is little “regulation” but the problem with that is less about the deivatives themselves and much more about the loopholes that encourage the creation of more derivatives AND how they are purchased, held, sold and used as collateral for other financial hedging. I STRONGLY urge you and anyone else that is interested in this to read “When Genius Failed” by Roger Lowenstein – who himself was interviewed in “The Warning”. the book covers the entire, detailed history of Long Term Capital Management from its founding to the (inevitable with 20-20- hindsight) failure and near-metldown of the entire investment banking world.

As to Bernie Madoff; his crimes had little – or nothing – to do with derivatives nor anything so much related to the issues outlined in “The Warning”. His was a rather straightforward “Ponzi Scheme” where he took money from later investors to provide big returns to earlier investors – which them encouraged those investors to re-invest their returns and even MORE Of their money, which Madoff in turn used to pay phony, large returns to the later investors, on-and-on, ad infinitum…until the unavoidable “tipping point”. In fact there is reason to believe that Madoff didn’t do much speculating in the Market at all – he just “robbed Peter to pay Paul” and it eventually caught up with him.

Finally, even in the light of Mr. Greenspans’s ultimate miscalculation of the Market vis-a-vis regulation, there is no denying his Economic genius; it was good enough for three Presidents to have him serve as Chairman of the Fed (and not even counting the decades of service to the Public trust in other roles). And he deserves some kudos for his forthright admission to Congress that he was wrong when he could have done what most officials do; posture and defend his positions in the spite of the evidence to the contrary. That said, I’d wholly endorse his handing over his Medal to Ms. Born…

Once again, great work JT.