Evil Geniuses: The Unmaking of America

by Kurt Andersen

In 1998 Brooksley Born, the federal official who was running the agency overseeing financial derivatives, got worried about the accelerating flurry of trading in new sorts of derivatives, in particular one called credit default swaps—which the rest of us would learn about a decade later, during the crash of 2008. But she was only one member of the official presidential task force that oversees the financial markets. By law, the other three are the Federal Reserve chair, a job to which Clinton had just reappointed Alan Greenspan; the treasury secretary, who was Bob Rubin, previously cochairman of Goldman Sachs; and the SEC chair, who’d also spent his pregovernment career working on Wall Street. The head of the SEC said later he’d been warned in advance that Born was “difficult” and “unreasonable.” When she argued at a meeting—in a “strident” way, Rubin recalled—that these new derivatives and the systemic risks they posed needed urgent scrutiny and possible regulations, the three men were appalled, particularly Greenspan, and they told her to calm down.