A recent FrontLine episode, called “The Warning”, was about Brooksley Born, who was director of the Commodity Futures Trading Commission for some years during the Clinton administration.  The show made a strong case that she tried very hard to warn the financial world up through 1998 that OTC derivatives were a very big risk.  Alan Greenspan, Robert Rubin, Larry Summers, and Arthur Levitt shut her down in mid-1998.  A few weeks later came the collapse of Long-Term Capital Management.

Ms. Born tried to proceed with her attempts to introduce regulation and was shut down by Congress at the urging of Greenspan, Rubin, Summers, and Levitt.  (In the program, Levitt states clearly that he was wrong about Brooksley Born and wished he had supported her at that time in 1998.  They also showed Greenspan in testimony to Congress in the last year or so admitting that he was wrong about markets being self-regulating.)

Here’s a link to the PBS/FrontLine page about this episode: