(By
Don Miller) Two key members of President Barack Obama's economic team were part of a group of financial heavyweights that in the late 1990s helped to kill regulatory reform that might have limited the impact of the 2008 financial meltdown.
Now, as the administration's primary proponents of free markets, they are again subverting efforts to tightly regulate trading activities and break up investment banks that are "too big to fail."
According to a report on "Frontline," a program broadcast by the Public Broadcasting System on October 20, current Treasury Secretary Timothy Geithner and Lawrence Summers, the Director of the White House Economic Council, were part of a group of free-market advocates that led a charge against proposed regulations to limit trading in over-the-counter (OTC) derivatives during the Clinton administration.
Those laissez-faire policies later led to a twenty-fold increase in the OTC markets over a ten year span – a house of cards that collapsed and spun the global economy into what is now being called the Great Recession.
The Frontline story raises new questions about Geithner's role in financial regulatory reform at a time when he is already being criticized his continued ties to Wall Street and his inability to effectively manage the bailout at American International Group, Inc. (NYSE: AIG).
The questions come as the administration continues to reject calls to break up the biggest banks and investment firms long before they fail, or impose strict limits on trading the high-risk OTC derivatives and other "dark market" securities that largely precipitated the economic collapse.
The Wizard of Wall Street and His Acolytes Invade Washington
As Frontline reported, Geithner and Summers were both principal advisors, along with Federal Reserve Chairman Alan Greenspan, to Robert Rubin, President Clinton's Secretary of the Treasury during the late 1990's.
Greenspan, sometimes called the "Wizard of Wall Street," is known as a financial libertarian vehemently opposed to government interference in markets. He first rose to power when he was named Chairman of the Federal Reserve Board during the Ford administration.
He and Rubin, who once ran Goldman Sachs (NYSE: GS) – along with former Harvard University professor Summers – were largely responsible for populating the Clinton administration with other free market acolytes, including Geithner.
The Frontline report examines how they formed a tight-knit alliance to shut down efforts by Brooksley E.
