How can the derivatives market be worth more than the world's total financial assets?" This Slate article
will tell you.
The Washington Post
article "What Went Wrong
" presents a detailed chronology of what led to the 2008 financial crisis, going back to Brooksley Born's attempts to bring derivatives under control.
Who is Brooksley Born?
Stanford University's alumni magazine profiles her
, tracing her career from the undergraduate days and her presidency of the Stanford Law Review
, to law firm years and her time at the CFTC. And in this Washington Post profile
of the "Credit Crisis Cassandra," Born talks about what it was like to be one of only seven women in her Stanford Law class and why she won't say "I told you so."
Early Derivative Blow-Ups
Here's coverage of three financial events in the 1990s that signaled the potential pitfalls with derivatives.
Start with these three accounts
of Orange County, Calif.'s 1994 derivatives-induced bankruptcy.
And these two stories
explain what happened in 1994 when Bankers Trust lost millions of dollars of client Procter & Gamble's money through risky derivative investments. This article
explains the settlement that Bankers Trust agreed to after Procter & Gamble sued.
The third event in the '90s was Long-Term Capital Management's near collapse in 1998. The New York Times
did an update
on that story 10 years later, following the 2008 financial meltdown. Browse the report
(PDF) authored by the President's Working Group -- the most influential White House body on financial policy during the Clinton years -- on LTCM's crisis. Their report called for "indirect regulation." Compare it to the Government Accountability Office's summary report
on LTCM, which recommended flexible direct regulation.
The Concept Release
Here's that 1998 concept release
that set Brooksley Born up for a battle with top members of Clinton's economic team over regulating derivatives. This transcript
from an address Born gave at the American Bar Association later that year summarizes much of the concept release in more basic language. Following the publication of the concept release, Born testified
before Congress in support of regulating derivatives. Federal Reserve Chairman Alan Greenspan
, Deputy Treasury Secretary Lawrence Summers
and SEC Chairman Arthur Levitt
all testified against regulation.
Regulation & the Current Crisis
is the main site for information on the Obama administration's efforts to restore the country's economy. It includes useful features like a "decoder
" that explains financial terms and a map
that allows you to trace what efforts are being made to help your community, plus links
to the latest press releases, legislation and testimony related to economic recovery, including over-the-counter derivatives reform
The latest Congressional Oversight Panel report on the government's attempts to buffer the effects of "troubled assets" left over from the collapse of the derivatives market and the future implications of these assets is available here
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