Being Wrong: Adventures in the Margin of Error

by Kathryn Schulz

Over the years, countless people had challenged his deregulatory dogma, including (to name just a few) Joseph Stiglitz and Paul Krugman, both Nobel Prize–winning economists, and Brooksley Born, who was head of the Commodity Futures Trading Commission from 1996 to 1999. Born eventually became something of a Cassandra figure for the crisis, since she repeatedly called for regulating the market for derivatives, those ultracomplex financial products that eventually helped bring down the economy. Those calls were silenced when Greenspan, along with then-Treasury Secretary Robert Rubin and then-Securities and Exchange Commission Chair Arthur Levitt, took the extraordinary step of convincing Congress to pass legislation forbidding Born’s agency from taking any action for the duration of her term. In a joint statement issued at the time, Greenspan defended the move on the grounds of “grave concern about this [proposed regulatory] action and its possible consequences.” Merely discussing the option of government regulation, he asserted, could destabilize the markets and send capital surging out of the United States.