Eleven years before the subprime Wall Street crash, a government official (Brooksley Born) warned about the potential for derivatives to bring down the US financial system. She attempted to rein in the unregulated dark market in derivatives. She was stopped dead by Alan Greenspan. This episode of Frontline is about this event which may not have stopped the crash but certainly would have made it less catastropic.

The program makes it clear that the roots of the current crash and recession started under Greenspan during the Clinton administration. Greenspan was a disciple of Ayn Rand and believed in a totally free market. He is quoted in the program as saying that the government should not even look for fraud as the market would weed out fraud better. Of course, this was before Bernie Madoff was caught by the government. As a result he fought to keep Born from regulating the unregulated dark market in OTC derivatives. It was these derivatives that was the problem when the crash happened. The program ends with Greenspan testifying before Congress and saying that his faith in the unfettered free market has turned out to be totally wrong.

Since this is a PBS show, you can look for re-runs and go to pbs.org for more on the episode. The bottom line for us, is the unregulated derivative market is still unregulated even though everyone in DC now knows how dangerous this unregulated market has been.

Danny