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Chapter 12: The Collapse!

BROOKSLEY BORN

One of the few persons who saw a danger in the
derivatives market was Brooksley Born, the chairperson
of the Commodity Futures Trading Commission
(CFTC.). The CFTC is the federal agency that oversees
the futures and
commodity options
markets. Brooksley With an over-the-counter
was the chairperson market, there is no way of
knowing the facts except what
of the CFTC from
the seller wishes to divulge.
August 1996 to
June 1999.
The government authorized the CFTC to detect
fraud in the over-the-counter derivatives market, a
market without an exchange. With an over-the-counter
market, there is no way of knowing the facts except
what the seller wishes to divulge. When she looked into
the market, she became concerned about the dangers it
posed to the entire economy. As chair of the CFTC, she
was aware of how quickly the over-the-counter
derivatives market was growing and how little federal
regulators knew about it.
Brooksley saw fraud and over speculation leading
to dramatic failures. One example is Orange County,
California, which went bankrupt because of high-risk
bets in the derivatives market. Iceland’s systemic
banking collapse was the largest experienced by any
country in history when three of the country’s major
privately owned commercial banks failed.
Iceland is an example of one of the most amazing
recoveries in history and is a testament to the resiliency
of sound fiscal policies. Within three years Iceland has

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