Thomas Cooley, dean of NYU's business school, criticizes Elizabeth Warren for her efforts to establish a financial product safety commission, calling her an "ideological crusader" waging a "self-righteous holy war." This echoes criticisms of former CFTC head Brooksley Born in the 1990s for her efforts to regulate derivatives, which were ignored and helped cause the 2008 financial crisis. Cooley implies that Warren, like Born, is an out of control force that needs to be stopped from interfering with free markets, despite evidence these markets contributed to economic collapse when unregulated.

1. T H U R SD AY, NOVE MB E R 1 9 , 2 0 0 9
THE BORN CONSPIRACY (redux) ... STARRING ELIZABETH WARREN
One of the more exciting series I've watched is the Bourne trilogy, starring Matt Damon.
Painted as an out of control experiment gone bad, Jason Bourne is pursued by powerful
forces trying to protect both themselves and a turf they believe others simply don't
understand. The Bourne reference to Elizabeth Warren will become clearer below ...
In 2007 Elizabeth Warren, head of the Congressional Oversight Panel for the Troubled Asset
Relief Program, penned an article that argued for a new model of financial regulation.
She wrote that financial products should be subject to the same - and by now routine - safety
screens that "governs every toaster, washing machine, and child's car seat." You know, the
kind of government-driven safety measures that we all take for granted and assume
are "market-driven." As is the case with all good legislation, Warren was clear that the focus
should be "primarily on consumer safety rather than corporate profitability." Specifically,
Warren wrote:
No one expects every customer to become an engineer to buy a toaster that doesn’t burst into
flames, or analyze complex diagrams to buy an infant car seat that doesn’t collapse on
impact. By the same reasoning, no customer should be forced to read the fine print in 30-
plus-page credit card contracts to determine whether the company claims it can seize
property paid for with the credit card or raise the interest rate by more than 20 points if the
customer gets into a dispute with the water company.
After what we've learned about the financial sector's abuses of consumers and their own
markets in 2008 and 2009 one would think that developing a financial product safety
commission that focuses on the economic health of consumers would be a slam dunk. Think
again.

2. Thomas Cooley, dean of New York University’s Stern School of Business, is part of growing
group of special interests - led by the Chamber of Commerce, the American Bankers
Association and the Financial Services Roundtable - who sees a wild-eyed fundamentalist in
Elizabeth Warren. Cooley argues that her regulatory efforts make her little more than “an
ideological crusader” who will "stir up a lot of trouble.” Using the same tired arguments built
around "free markets" and their magical powers to reign in stupidity, greed, and fraud,
Cooley is effectively arguing that the same markets that helped create and fund lending
activities before the 2008 market collapse only need to be tinkered with by "thoughtful
people" doing "thoughtful analysis." Elizabeth Warren, according to Thomas Cooley, is not
one of these people.
Accusing her of “waging a self-righteous holy war” Cooley makes the same arguments that
were made about Brooksley Born, former head of the Commodity Futures Trading
Commission (CFTC), who warned about the dangers of an unregulated derivatives market in
the mid-1990s.
Born, whose warnings were famously ignored and criticized at the time by Alan Greenspan
(Federal Reserve Chair), Larry Summers (Clinton's Council of Economic Advisors), Robert
Rubin (Treasury Secretary), and Arthur Levitt (SEC Chair), was labled as an out of control
zealot. Because of her efforts to audit and regulate the derivative market, which helped
bring down the American economy in 2008, Born was painted as an "irrascible, difficult,
stubborn" woman who was "unreasonable" when it came to judging the power of markets.

3. The logic of the market was presumed to be so powerful at the time that Alan
Greenspan even went so far as to argue that fraud could be handled by the market and should
not be regulated. This is all discussed in the Frontline video, The Warning (Arthur Levitt is
not pictured in this Frontline ad/promo; presumably because he later regretted going after
Born, and was interviewed saying as much).
For her efforts, Greenspan, Summers, Rubin, and Levitt conspired to work against Born,
eventually forcing her from her post as director of the CFTC. In many respects their efforts
could have been labled The Born Conspiracy.
Cooley revives this anti-regulatory mentality, implying that Warren is devoid of "rational and
clear-headed perspective." He even goes so far as to disparagingly suggest that Warren's
goals are Crusade-like and little more than her war of "faith" on markets. The implication is
clear. Like Jason Bourne in the trilogy - and Brooksley Born in the 1990s - regardless of the
talent, skill, and motives involved in her efforts, Elizabeth Warren is viewed as an out of
control force that needs to be stopped.
That this kind of mentality exists, so close to the market collapse, is troubling. It also helps
explain how, if we continue to do nothing to discipline or regulate market players, we're
setting ourselves up for another market collapse.