Brooksley Born

Brooksley Elizabeth Born (born August 27, 1940) During her tenure on the CFTC, Born lobbied Congress and the President to give the CFTC oversight of off-exchange markets for derivatives, in addition to its role with respect to exchange-traded derivatives, but her warnings were ignored or dismissed, and her calls for reform resisted by other regulators. Born resigned as chairperson on June 1, 1999, shortly after Congress passed legislation prohibiting her agency from regulating derivatives.

In 2009, Born received the John F. Kennedy Profiles in Courage Award, along with Sheila Bair of the Federal Deposit Insurance Corporation, in recognition of the "political courage she demonstrated in sounding early warnings about conditions that contributed" to the 2008 financial crisis.

Early life and education Born graduated from Abraham Lincoln High School (San Francisco, California) at the age of 16. She then attended Stanford University, where she majored in English and was graduated with the class of 1961. She initially wanted to become a doctor, but a guidance counsellor at Stanford advised her against medicine, so she majored in English literature instead.

She then attended Stanford Law School, one of only seven women in her class. She was the first female student ever to be named president of the Stanford Law Review.

Legal career Immediately after law school Born was selected as a law clerk to judge Henry Edgerton of the U.S. Court of Appeals for the District of Columbia Circuit. It was during this time that she met her first husband, Jacob C. Landau, who was a journalist covering the Federal courts at the time. Following her clerkship, she became an associate at the Washington, D.C.-based international law firm of Arnold & Porter. Born was attracted to Arnold & Porter because it was one of the few major law firms to have a woman partner at that time, Carolyn Agger, who was the head of the tax practice. Born took a two-year leave of absence from Arnold & Porter to accompany her first husband to Boston, where he had received a fellowship. During that time she worked as a research assistant to law professor Alan Dershowitz. and eventually rose to be the head of the firm's derivatives practice.

Born was among the first female attorneys to systematically address inequities regarding how the laws treated women. Born and another female lawyer, Marna Tucker, taught what is considered to have been the first "Women and the Law" course at Catholic University’s Columbus School of Law. The class exclusively concerned prejudicial treatment of women under the laws of the United States, past and present. Born and Tucker were surprised to discover that there was no textbook on the issue at the time.

During her long legal career, and into her retirement, Born did much pro bono and other types of volunteer work. She was active in the American Bar Association, the largest professional organization of lawyers in the United States. Initially Born was named a member of the governing council of the ABA's Individual Rights Section, eventually becoming chairperson.

In July 2009, Nancy Pelosi appointed Brooksley Born as a commissioner to the Financial Crisis Inquiry Commission (FCIC).

Born and the OTC derivatives market Born was appointed to the CFTC on April 15, 1994, by President Bill Clinton. Due to litigation against Bankers Trust Company by Procter and Gamble and other corporate clients, Born and her team at the CFTC sought comments on the regulation of over-the-counter (OTC) derivatives, The disagreement between Born and the Executive Office's top economic policy advisors has been described not only as a classic Washington turf war, but also a war of ideologies, In congressional hearings into the crisis, Greenspan acknowledged that language had been introduced into an agriculture bill that would prevent CFTC from regulating the derivatives which were at the center of the crisis that threatened the US economy. U.S. Representative Maurice Hinchey (D-NY) asked "How many more failures do you think we'd have to have before some regulation in this area might be appropriate?" In response, Greenspan brushed aside the substance of Born's warnings with the simple assertion that "the degree of supervision of regulation of the over-the-counter derivatives market is quite adequate to maintain a degree of stability in the system". Born's warning was that there wasn't any regulation of them. Born's chief of staff, Michael Greenberger summed up Greenspan's position this way: "Greenspan didn't believe that fraud was something that needed to be enforced, and he assumed she probably did. And of course, she did." Under heavy pressure from the financial lobby, legislation prohibiting regulation of derivatives by Born's agency was passed by the Congress. Born resigned on June 1, 1999.

Born declined to publicly comment on the unfolding 2008 crisis until March 2009, when she said: "The market grew so enormously, with so little oversight and regulation, that it made the financial crisis much deeper and more pervasive than it otherwise would have been." described Born's thwarted efforts to regulate and bring transparency to the derivatives market, and the continuing opposition thereto. The program concluded with an excerpted interview with Born sounding another warning: "I think we will have continuing danger from these markets and that we will have repeats of the financial crisis -- may differ in details but there will be significant financial downturns and disasters attributed to this regulatory gap, over and over, until we learn from experience."

In 2009 Born, along with Sheila Bair of the FDIC, was awarded the John F. Kennedy Profiles in Courage Award in recognition of the "political courage she demonstrated in sounding early warnings about conditions that contributed" to the 2008 financial crisis. According to Caroline Kennedy, "Brooksley Born recognized that the financial security of all Americans was being put at risk by the greed, negligence and opposition of powerful and well connected interests.... The catastrophic financial events of recent months have proved them [Born and Sheila Bair] right." One member of the President's working group had a change of heart about Brooksley Born. SEC Chairman Arthur Levitt stated "I've come to know her as one of the most capable, dedicated, intelligent and committed public servants that I have ever come to know", adding that "I could have done much better. I could have made a difference" in response to her warnings.

In 2010, a documentary film Inside Job further alleged that derivatives regulation was ineffective from the Clinton administration on. Along with fellow whistleblower, former IMF Chief Economist Raghuram Rajan, who was also scorned by the economic establishment, Brooksley Born was cited as one of the authorities arguing that financial derivatives increase economic risk.

Personal life Born is married to Alexander E. Bennett (also retired from Arnold & Porter). She has five adult children - two from a previous marriage to Jacob Landau and three stepchildren. Notably, Born was named a partner at Arnold & Porter while working part-time so she could raise her two young children. When both of her children were school-age, Born returned to practice full-time.