Brooksley

Whenever we get fed up with federal government regulation, it’s good to remember the saga of Brooksley Born, the derivatives lawyer who for almost three years was the chairman of the Commodity Futures Trading Commission (CFTC).

Sometimes more regulation, not less, is needed.

Ms. Born was clearly an excellent attorney and one who totally understood derivatives, having, at the time, 20 years or more of hands-on experience with these dark investments and side-deal insurance arrangements. She felt that it was necessary to regulate the “black box” of credit default swaps and other option and derivative deals among various corporate parties, an underground, underwater economy of perhaps $21 trillion and one totally invisible to regulators.

At the time, the United States was humming along, the market was making new highs, and life was good. Ms. Born apparently also felt that life was good but knew that the day was soon coming when the piper would need to be paid. This put her completely at odds with a trio of power players in Washington — Alan Greenspan, Lawrence Summers and Robert Rubin.

In the end, Brooksley Born was exactly correct, and the piper was paid by the taxpayer through bailouts (think AIG), corporate deaths (think Lehman and Bear Stearns) and a credit crisis (think 2007 and 2008). Before the end, Brooksley Born lost the battle to the terrible trio of Greenspan, Rubin and Summers. As it happens, the trio was completely wrong, and Ms. Born was completely right. Nonetheless, Greenspan, Rubin and Summers are still major players on the world stage, retired or active, and Brooksley Born is barely remembered.

Brooklsey Born is a hero — it took guts to go up against any one of that gang of three, and she did it in a heartbeat. I’m not so enamored of Messrs. Greenspan, Summers and Rubin. They liked being in charge (and being famous) more than saving us from a crisis.

It’s good to remember Ms. Born. And it’s good to remember that we do sometimes need more regulation.