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Trump’s Economic Era

risen from the ashes while experiencing a robust
economy. Because banks are high tech corporations,
when they collapsed, there was a plethora of technology
talent on the market, which companies could reasonably
hire. Because the technology sector is more creative
than the banking sector, Iceland was able to grow.

Iceland has implemented policies contrary to
Western practices, including the United States. Iceland
was more concerned about its democracy than it was
about its financial markets. Contrary to the prevailing
orthodoxy, instead of bailing out the bankers, Iceland
imprisoned many of them, and insolvent banks were
allowed to fail. Instead of creating money to bail out the
financial system, Iceland supported its citizens
according to a public referendum. The IMF and the
World Bank were highly critical of the country; China
was the only country that helped Iceland.

Brooksley was concerned because few in
government even knew about derivatives, yet all the big
banks were dealers in the market. Her concern was that
a default in the market could cause a domino effect
throughout the economy. For example, Proctor &
Gamble lost $200 billion and sued its derivative’s
dealer, Bankers Trust, for fraud, alleging that the bank
had sold them complex derivatives without proper
explanation. In 1996, Bankers Trust settled with Proctor
& Gamble, forgiving most of the debt.

Now here is where things get interesting. When
Brooksley contacted the Treasury Department, the
Federal Reserve, and the Securities and Exchange
Commission about her concerns, not only were they
complacent, but they questioned whether Brooksley had
the authority to take action.

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