More About Brooksley Born

Manuel Roig-Franzia The Washington Post

It begins with a father who wants a boy. She was born in San Francisco. Her father was a welfare agency executive for a long time. And he thought it would be great to have a son. His best friend at the time was named Brooks, and he thought, "I'll name my son Brooks." But he ended up with a girl and he named her Brooksley at the last minute, feminizing it.

And why is this significant at all? I think that as you look at the trajectory of Brooksley Born, you see a situation in which this woman is forever coming up against the question of her identity as a woman in a man's world.

She goes to Stanford; she attends the law school there. And on one of her first days, one of her male classmates comes up to her and says: "You are taking the place of a man who will surely be going to Vietnam and risking his life for America. You are taking his place. If you weren't here, he might not be over there risking his life." So can you imagine what that must have been like for a woman who was pushing up against some barriers?

She goes on to then be the first female president of the Law Review at Stanford. They have a vote and she's the obvious choice because she's first in her class. You would think this would be a great moment of triumph for Brooksley Born. Instead, she gets a phone call from one of the deans. She goes down to his office and he says, "Brooksley, I just want to let you know that the faculty stands ready to step in if you're not able to pull this off."

Can you imagine? You're number one in your class. You're the first woman, ever, to be number one in your class. Interesting to note that there was another pretty smart, female law student that preceded her named Sandra Day O'Connor at Stanford University -- but Brooksley Born was the first to be number one. …

She'll [say] that her response was, "I don't plan to fail." It goes on like that, on and on and on at each step of Brooksley Born's life and career. …

What is her specialty in law? What does she end up doing?

She ends up at Arnold & Porter, a prestigious law firm, and she begins representing futures exchanges, including the London Futures Exchange, which is an important one.

She starts becoming an expert in an area of the law that very few people are experts in. And she gets involved in the '80s in this really important headline-grabbing case of the manipulation of the silver market by these wealthy brothers, the Hunt brothers.

Wealthy Texas brothers, right?

Yes. And she was representing the clients of a Swiss bank who were being accused of being complicit in all of this. But through that process she begins to understand how these markets work. And she gets to bore into a subject, and gets sort of an insider's look at it, because she's representing these people who had millions of dollars at stake that other lawyers who might just have a casual interaction with that world might never have gotten to glimpse.

It makes her skeptical of this really important notion. ... It's the question of sophisticated investors and can they be trusted to have their best interests at heart, no matter what, to prevent fraud, and [protect] unsophisticated investors? The idea was that sophisticated investors would police themselves because they would need clean markets in order for things to function.

But what she learned through the silver case was that sophisticated investors could be duped just as easily as you and me.

Because greed overtakes, trumps any rationality, yes?

And perhaps also because when you're a sophisticated investor, you are involved in complex transactions that are, in some ways, more easy to manipulate than less complicated transactions.

Nancy Duff Campbell Washington attorney

At that time, there weren't very many women who even went to law school. I think she's told the story that she took some kind of an aptitude test to try to see what she was good for, because that was sort of a traditional thing that happened then. And she liked to joke that the test itself, they had a certain test for women and a certain test for men, and they were even pink and blue in their colors. I don't know if that's apocryphal or not. But that's what she jokes about.

And the idea was, well, let's see if a woman should be a nurse or a teacher. It wasn't, let's see if she should be a nurse or a teacher or a lawyer. I think either she or maybe her mother said: "Well, don't limit yourself to the test for women. Take the test for the men, too." And she did, and apparently showed some aptitude for law, and decided then to go to law school.

There were very few women in law school at the time. Stanford had one of the larger classes, maybe 10 percent. So the first thing was just going to law school and being in a very limited group of women.

And then, this was during the Vietnam War. I know that she's described her experience -- which is similar to one that occurred when I went to law school a few years later -- that a lot of men in the class [were] saying, "What are you doing here? You're taking the place of somebody, a man who could be here and not have to go to the war," because at that time, there were graduate deferments.

And I know that Brooksley -- again, this is a mark of her excellence -- the way she approached this was: "Well, I'd better do really well, because I've got a coveted place. And I've got to show them I can do it." And she did. She graduated at the top of her class. …

What drove her?

I think that she had a lot of internal drive, if I can extrapolate. Of course I didn't know her then. I think that her parents were very encouraging, just as the story of her mother and the test illustrates. And I think she had a lot of self-confidence that has carried her well throughout her career, and that made her want to do well then and do well thereafter. …

She's interested, afterwards, in possibly clerking for the Supreme Court?

One of the marks of a path to success after law school is to clerk for a judge, usually a federal judge if you can and, of course, a Supreme Court justice if you can. But at that time, again, many judges just didn't pick women. They didn't think twice about saying, "Well, I don't take women as clerks." ...

So she comes to Washington. She likes it. What happens next?

Yeah, she came to Washington and clerked for a federal judge. And ... she kind of got the policy bug and saw that it was a very exciting place to be a lawyer in Washington. She'd seen very interesting cases in her court experience. And so she decided that she wanted to stay in Washington and to practice here.

I think she was committed from the beginning not only to be excellent, but to be excellent in a way that would make a difference for people.

Michael Greenberger Director, CTFC Division of Trading and Markets (1997-1999)

She had developed a very close relationship with Hillary Clinton when Hillary Clinton was a very prominent lawyer in Little Rock, Ark. ... When Clinton got elected, I remembered hearing the story that [Mrs. Clinton] and Clinton and a group were bandying about who would be the attorney general, and somebody said, "Well, Brooksley Born would be a good attorney general." ... And Brooksley went in for an interview with Clinton. The story comes back was that Clinton found her boring and that it never went anywhere. ...

I think to some extent you could view this [position as head of the CFTC] as a consolation prize. ... To the general world, people who knew Brooksley, the circles she traveled, the American Bar Association, the D.C. Bar, all the prestigious boards she served on, people were probably scratching their heads.

Joe Nocera The New York Times

When she first gets the job, she gets invited to lunch [with] [Fed Chairman] Alan Greenspan, and they talk about fraud. Do you remember the story?

It's actually becoming a somewhat famous story. This was only the third time they met. And she is still fairly new on the job. And she said he said something to the effect that, "Well, Brooksley, we are never going to agree on fraud." And she said, "Well, what do you mean?" And he said, "You probably think there should be rules against it." And she said, "Well, yes, I do."

He said, "I think the market will figure it out and take care of the fraudsters." That is kind of an exaggerated view of the way he thought about markets -- the markets were self-correcting; markets could root out problems; markets would sort of shame the bad guys and help the good guys because bad guys would be ostracized by other market participants.

Sheila Bair Chair, Federal Deposit Insurance Corporation (2006-present)

I had left the CFTC by the time she became chairman. But I was working at the New York Stock Exchange and just made her acquaintance. … We just connected. I think she wanted to hear some of my thoughts on some of these issues that we'd already been grappling with. …

So I was very impressed with her. I thought she was independent. She did believe in regulation and that value could come of regulation. And I think she wanted to do the right thing from a policy basis on these instruments and did see some of the growing risks.

So I think I was really not in a position to be very much help to her at that point, other than to talk and provide moral support perhaps. But I do think that she did accurately identify the burgeoning risks that were growing, and had become more profound since when I had been at the CFTC. But she was facing a very difficult industry resistance. …

Her view of the role that CFTC should play merged to some extent with your view?

Yeah, I think so. I think she was just trying to bring some semblance of oversight to some of these markets. I think, unfairly, people tried to paint her position as more extreme than that, like she was trying to force everything onto regulated futures exchanges. That's not what she was trying to do.

She was just trying to provide some common-sense overlay of supervision to these growing markets, these very internationally active markets, these very large markets.

But there was a very strong view in the industry among the major players in the swap market to not have any regulation. That had been religion with them for years -- keep the CFTC out of this as much as they can. And I think they had … successfully persuaded the Treasury and the Fed that the CFTC was overstepping itself, and this was just a power grab, a turf battle. …

How difficult was it at that point for a woman to rise up in the levels of government, especially when it came to Wall Street issues?

That's a good question. I don't know. Certainly this is a heavily male-dominated culture, and derivatives are a relatively recent innovation -- maybe a little bit more of a cowboy culture than other more established, regulated parts of the industry.

So that may have been an undercurrent, making that difficult situation even more difficult in terms of advocating and persuading others to her point of view.

David Wessel The Wall Street Journal; author, In Fed We Trust

[Treasury Secretaries Robert] Rubin, [Larry] Summers and Greenspan had a great deal of faith in their own intellects. And I think that they were not welcoming of somebody who looked at the world differently and was kind of abrasive.

There probably were some issues of gender there. You may remember that there was also tension with [former EPA head] Carol Browner, who was doing environmental stuff. So I think that no matter what the merits, there was bound to be some resistance. …

The system wasn't set up to allow somebody like Brooksley Born to have a real impact. And she didn't do it in a way that was likely to maximize her chances of getting Greenspan and Rubin and Summers to listen to her.

What does that mean?

A lot in public, and a frontal assault on their intelligence and on what they were doing. In a sense, Joe Stiglitz has had similar issues. I mean, here's a guy who's a genius, … who won a Nobel Prize for identifying a situation where markets don't work just right.

But he seems to be better at calling attention to these things than actually finding a way to get a government to actually do something about them.

The most successful people in these jobs have two characteristics: One, like Brooksley Born, they spot something that needs to be addressed, and two, they figure out some way to get it addressed. And the one is necessary, but it's not sufficient.

And so, if you really want to judge somebody as a regulator or as a politician, it's about seeing things and getting them done.

Why does Teddy Kennedy have such a great reputation in Washington? It's because, on the one hand, he gives a great speech; he's a lion of the left; he's a real progressive; he stands for things. And he manages to get bills through Congress.

Well, Brooksley Born was no Teddy Kennedy. That's just a fact. They don't often come in the same package. People who see things that other people don't see don't tend to be the people who are best at getting consensus.

Arthur Levitt Chair, Securities & Exchange Commission (1993-2001)

Didn't know Brooksley Born. I was told about Brooksley Born. I was told that she was irascible, difficult, stubborn, unreasonable. 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. I wish I knew her better in Washington, and I wish my view of her was more rounded by personal exposure. ...

In my life I've had so many occasions of finding my impressions were incorrect and revising them, depending upon the circumstances, depending upon what stage of life I happen to be or what other factors were bearing on it. …

I've got to say to you that I have just huge affection and admiration and trust in Brooksley Born.

Based on?

Based on seeing a good deal of her in recent months, in talking to her about what I regard to have been a bad judgment that I made during that period when she was urging the President's Working Group to allow her to regulate swaps. You tend to gain some perspective when you recognize that you might have made a mistake.