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Brooksley Born

Brooksley Born

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Brooksley E. Born is an American attorney
A lawyer, according to Black's Law Dictionary, is "a person learned in the law; as an attorney, counsel or solicitor; a person who is practicing law." Law is the system of rules of conduct established by the sovereign government of a society to correct wrongs, maintain the stability of political...

 and former public official who, from August 26, 1996, to June 1, 1999, was chairperson of the Commodity Futures Trading Commission
Commodity Futures Trading Commission
The U.S. Commodity Futures Trading Commission is an independent agency of the United States government that regulates futures and option markets....

 (CFTC), the federal agency which oversees the futures
Futures exchange
A futures exchange or futures market is a central financial exchange where people can trade standardized futures contracts; that is, a contract to buy specific quantities of a commodity or financial instrument at a specified price with delivery set at a specified time in the future. These types of...

 and commodity options markets. During her tenure on the CFTC, Born lobbied Congress and the President to give the CFTC oversight of off-exchange markets for derivatives
Derivative (finance)
A derivative instrument is a contract between two parties that specifies conditions—in particular, dates and the resulting values of the underlying variables—under which payments, or payoffs, are to be made between the parties.Under U.S...

 in addition to its role with respect to exchange-traded derivatives, but her warnings were opposed by other regulators.

Early life and education

Born graduated from Abraham Lincoln High School (San Francisco, California) at the age of 16. She then attended Stanford University
Stanford University
The Leland Stanford Junior University, commonly referred to as Stanford University or Stanford, is a private research university on an campus located near Palo Alto, California. It is situated in the northwestern Santa Clara Valley on the San Francisco Peninsula, approximately northwest of San...

, where she majored in English and was graduated with the class of 1961. She initially wanted to pursue a career in medicine. However, the guidance counseling service at Stanford opposed this, as it was their stated opinion that a woman who was interested in becoming a doctor, instead of the more suitable career of a nurse, was merely materialistic and had no sincere interest in healing.

She then attended Stanford Law School
Stanford Law School
Stanford Law School is a graduate school at Stanford University located in the area known as the Silicon Valley, near Palo Alto, California in the United States. The Law School was established in 1893 when former President Benjamin Harrison joined the faculty as the first professor of law...

, one of only seven women in her class. She was the first female student ever to be named president of the Stanford Law Review
Stanford Law Review
The Stanford Law Review is a legal journal produced independently by Stanford Law School students. The journal was established in 1948 with future U.S. Secretary of State Warren Christopher as its first president...

. She received the "Outstanding Senior" award and graduated at the top of her class in 1964.

Legal career

Immediately after law school Born was selected as a law clerk
Law clerk
A law clerk or a judicial clerk is a person who provides assistance to a judge in researching issues before the court and in writing opinions. Law clerks are not court clerks or courtroom deputies, who are administrative staff for the court. Most law clerks are recent law school graduates who...

 to judge Henry Edgerton of the U.S. Court of Appeals for the District of Columbia Circuit. It was during this time that she met her first husband, Jacob C. Landau, who was a journalist covering the Federal courts at the time. Following her clerkship, she became an associate at the Washington, D.C.
Washington, D.C.
Washington, D.C., formally the District of Columbia and commonly referred to as Washington, "the District", or simply D.C., is the capital of the United States. On July 16, 1790, the United States Congress approved the creation of a permanent national capital as permitted by the U.S. Constitution....

-based international law firm of Arnold & Porter
Arnold & Porter
Arnold & Porter LLP is a nine-office international law firm based in Washington, D.C. Arnold & Porter is well known for its trial, corporate, and antitrust work, and for its pro bono commitments and support for liberal causes.-History:...

. Born was attracted to Arnold & Porter because it was one of the few major law firms to have a woman partner at that time, Carolyn Agger, who was the head of the tax practice. Born took a two year leave of absence from Arnold & Porter
Arnold & Porter
Arnold & Porter LLP is a nine-office international law firm based in Washington, D.C. Arnold & Porter is well known for its trial, corporate, and antitrust work, and for its pro bono commitments and support for liberal causes.-History:...

 to accompany her first husband to Boston
Boston is the capital of and largest city in Massachusetts, and is one of the oldest cities in the United States. The largest city in New England, Boston is regarded as the unofficial "Capital of New England" for its economic and cultural impact on the entire New England region. The city proper had...

, where he had received a fellowship. During that time she worked as a research assistant to law professor Alan Dershowitz
Alan Dershowitz
Alan Morton Dershowitz is an American lawyer, jurist, and political commentator. He has spent most of his career at Harvard Law School where in 1967, at the age of 28, he became the youngest full professor of law in its history...


Born's early career at Arnold & Porter focused on international trade law, in which she represented a number of Swiss industries and the government of Switzerland. She developed a practice representing clients in numerous complex litigation and arbitration cases involving financial market transactions. Among her high-profile cases was the matter of the Hunt Brothers
Nelson Bunker Hunt
Nelson Bunker Hunt is an American oil company executive. He is best known as a former billionaire whose fortune collapsed after he and his brother William Herbert Hunt tried but failed to corner the world market in silver. He is also a successful thoroughbred horse breeder.-Personal:Hunt was born...

 attempt to corner the market
Cornering the market
In finance, to corner the market is to get sufficient control of a particular stock, commodity, or other asset to allow the price to be manipulated. Another definition: "To have the greatest market share in a particular industry without having a monopoly...

 in silver in the 1970s. She made partner at Arnold & Porter and eventually rose to be the head of the firm's derivatives
Derivative (finance)
A derivative instrument is a contract between two parties that specifies conditions—in particular, dates and the resulting values of the underlying variables—under which payments, or payoffs, are to be made between the parties.Under U.S...


Born was among the first female attorneys to systematically address inequities regarding how the laws treated women. Born and another female lawyer, Marna Tucker, taught what is considered to have been the first “Women and the Law” course at Catholic University
The Catholic University of America
The Catholic University of America is a private university located in Washington, D.C. in the United States. It is a pontifical university of the Catholic Church in the United States and the only institution of higher education founded by the U.S. Catholic bishops...

’s Columbus School of Law
Columbus School of Law
The Columbus School of Law, also known as CUA Law, is the law school of The Catholic University of America, in Washington, D.C..Over 900 Juris Doctor students attend CUA Law. Incoming classes are typically composed of two to three hundred students, including day and night programs. Around 3,500...

. The class exclusively concerned prejudicial treatment of women under the laws of the United States, past and present. Born and Tucker were surprised to discover that there was no textbook on the issue at the time. Born is also one of the co-founders of the National Women's Law Center
National Women's Law Center
The National Women's Law Center is a Washington, DC-based non-profit organization founded in 1972. Through litigation and policy initiatives, the Center strives to improve the lives of women and their families in the areas of health, employment, family economic security, and education...


During her long legal career, and into her retirement, Born did much pro bono and other types of volunteer work. She was active in the American Bar Association
American Bar Association
The American Bar Association , founded August 21, 1878, is a voluntary bar association of lawyers and law students, which is not specific to any jurisdiction in the United States. The ABA's most important stated activities are the setting of academic standards for law schools, and the formulation...

, the largest professional organization of lawyers in the United States. Initially Born was named a member of the governing council of the ABA's Individual Rights Section, eventually becoming Chairperson. Born and Tucker founded the ABA Women's Caucus, the first organization of female lawyers in the ABA. She held several other senior positions in the ABA, including being named the first woman member of the ABA’s Standing Committee on the Federal Judiciary. As a member of the Judiciary Committee, Born provided testimony and opinion on persons nominated for federal judgeships. In 1980 she was named Chair of the committee. As Chair of the committee, Born was invited to address the U.S. Congress regarding the nomination of Judge Sandra Day O'Connor
Sandra Day O'Connor
Sandra Day O'Connor is an American jurist who was the first female member of the Supreme Court of the United States. She served as an Associate Justice from 1981 until her retirement from the Court in 2006. O'Connor was appointed by President Ronald Reagan in 1981...

 to the U.S. Supreme Court.

In 1993 Born's name was floated as a possible candidate for Attorney General
Attorney General
In most common law jurisdictions, the attorney general, or attorney-general, is the main legal advisor to the government, and in some jurisdictions he or she may also have executive responsibility for law enforcement or responsibility for public prosecutions.The term is used to refer to any person...

 of the United States, although ultimately Janet Reno
Janet Reno
Janet Wood Reno is a former Attorney General of the United States . She was nominated by President Bill Clinton on February 11, 1993, and confirmed on March 11...

 was nominated.

In July 2009 Nancy Pelosi
Nancy Pelosi
Nancy Patricia D'Alesandro Pelosi is the Minority Leader of the United States House of Representatives and served as the 60th Speaker of the United States House of Representatives from 2007 to 2011...

 appointed Brooksley Born as a commissioner to the Financial Crisis Inquiry Commission
Financial Crisis Inquiry Commission
The Commission reported its findings in January 2011. It concluded that "the crisis was avoidable and was caused by: Widespread failures in financial regulation, including the Federal Reserve’s failure to stem the...


Born and the OTC Derivatives Market

Born was appointed to the CFTC on April 15, 1994 by President Bill Clinton
Bill Clinton
William Jefferson "Bill" Clinton is an American politician who served as the 42nd President of the United States from 1993 to 2001. Inaugurated at age 46, he was the third-youngest president. He took office at the end of the Cold War, and was the first president of the baby boomer generation...

. Due to litigation against Bankers Trust Company
Bankers Trust
Bankers Trust was an historic American banking organization. The bank merged with Alex. Brown & Sons before being acquired by Deutsche Bank in 1998.-History:A consortium of banks created Bankers Trust to perform trust company services for their clients....

 by Procter and Gamble and other corporate clients, Born and her team at the CFTC sought comments on the regulation of over-the-counter derivatives, a first step in the process of writing CFTC regulations to supplement the existing regulations of the Federal Reserve System, the OCC
OCC is an acronym for several American colleges:* Oakland Community College, Michigan* Oakton Community College, Illinois* Ocean County College, New Jersey* Onondaga Community College, New York* Orange Coast College, California...

, and the National Association of Insurance Commissioners
National Association of Insurance Commissioners
The National Association of Insurance Commissioners is an Internal Revenue Code Section 501 non-profit organization which seeks to organize the regulatory and supervisory efforts of the various state insurance commissioners from around the United States. The NAIC was formed in 1871. Its current...

. Born was particularly concerned about swaps
Swap (finance)
In finance, a swap is a derivative in which counterparties exchange certain benefits of one party's financial instrument for those of the other party's financial instrument. The benefits in question depend on the type of financial instruments involved...

, financial instruments that are traded over the counter
Over-the-counter (finance)
Within the derivatives markets, many products are traded through exchanges. An exchange has the benefit of facilitating liquidity and also mitigates all credit risk concerning the default of a member of the exchange. Products traded on the exchange must be well standardised to transparent trading....

 between banks, insurance companies or other funds or companies, and thus have no transparency except to the two counterparties and the counterparties' regulators, if any. CFTC regulation was strenuously opposed by Federal Reserve chairman Alan Greenspan
Alan Greenspan
Alan Greenspan is an American economist who served as Chairman of the Federal Reserve of the United States from 1987 to 2006. He currently works as a private advisor and provides consulting for firms through his company, Greenspan Associates LLC...

, and by Treasury Secretaries Robert Rubin
Robert Rubin
Robert Edward Rubin served as the 70th United States Secretary of the Treasury during both the first and second Clinton administrations. Before his government service, he spent 26 years at Goldman Sachs eventually serving as a member of the Board, and Co-Chairman from 1990-1992...

 and Lawrence Summers
Lawrence Summers
Lawrence Henry Summers is an American economist. He served as the 71st United States Secretary of the Treasury from 1999 to 2001 under President Bill Clinton. He was Director of the White House United States National Economic Council for President Barack Obama until November 2010.Summers is the...

. On May 7, 1998, former SEC Chairman Arthur Levitt
Arthur Levitt
Arthur Levitt, Jr. was the twenty-fifth and longest-serving Chairman of the United States Securities and Exchange Commission from 1993 to 2001. Widely hailed as a champion of the individual investor, he has been criticized for not pushing for tougher accounting rules. Since May 2001 he has been...

 joined Rubin and Greenspan in objecting to the issuance of the CFTC’s concept release. Their response dismissed Born's analysis and focused on the hypothetical possibility that CFTC regulation of swaps and other OTC derivative instruments could create a "legal uncertainty" regarding such financial instruments, hypothetically reducing the value of the instruments. They argued that the imposition of regulatory costs would "stifle financial innovation" and encourage financial capital to transfer its transactions offshore. The disagreement between Born and the Executive Office's top economic policy advisors has been described not only as a classic Washington turf war, but also a war of ideologies, insofar as it is possible to argue that Born's actions were consistent with Keynesian and neoclassical economics
Neoclassical economics
Neoclassical economics is a term variously used for approaches to economics focusing on the determination of prices, outputs, and income distributions in markets through supply and demand, often mediated through a hypothesized maximization of utility by income-constrained individuals and of profits...

 while Greenspan, Rubin, Levitt, and Summers consistently espoused Austrian
Austrians are a nation and ethnic group, consisting of the population of the Republic of Austria and its historical predecessor states who share a common Austrian culture and Austrian descent....

, neoliberal, and neoconservative laissez faire policies.

In 1998, a trillion dollar hedge fund called Long Term Capital Management was near collapse. Using mathematical models to calculating debt risk, LTCM used derivatives to leverage $5 billion into more than $1 trillion, doing business with fifteen of Wall Street's largest financial institutions. The derivative transactions were not regulated, nor were investors able to evaluate LTCM's exposures. Born stated, "I thought that LTCM was exactly what I had been worried about". In the last weekend of September 1998, the President's working group was told that the entire American economy hung in the balance. After intervention by the Federal Reserve, the crisis was averted. In congressional hearings into the crisis, Greenspan acknowledged that language had been introduced into an agriculture bill that would prevent CFTC from regulating the derivatives which were at the center of the crisis that threatened the US economy. U.S. Representative
United States House of Representatives
The United States House of Representatives is one of the two Houses of the United States Congress, the bicameral legislature which also includes the Senate.The composition and powers of the House are established in Article One of the Constitution...

 Maurice Hinchey
Maurice Hinchey
Maurice Dunlea Hinchey , is the U.S. Representative for , serving since 1993. He is a member of the Democratic Party...

 (D-NY) asked "How many more failures do you think we'd have to have before some regulation in this area might be appropriate." In response, Greenspan brushed aside the substance of Born's warnings with the simple assertion that "the degree of supervision of regulation of the over-the-counter derivatives market is quite adequate to maintain a degree of stability in the system". Born's warning that was that there wasn't any regulation of them. Born's chief of staff, Michael Greenberger summed up Greenspan's position this way: "Greenspan didn't believe that fraud was something that needed to be enforced, and he assumed she probably did. And of course, she did." Under heavy pressure from the financial lobby, legislation prohibiting regulation of derivatives by Born's agency was passed by the Congress. Born resigned on June 1, 1999.

The derivatives market continued to grow yearly throughout both terms of George W. Bush's administration. On September 15, 2008, the bankruptcy of Lehman Brothers
Bankruptcy of Lehman Brothers
Lehman Brothers filed for Chapter 11 bankruptcy protection on September 15, 2008. The bankruptcy of Lehman Brothers remains the largest bankruptcy filing in U.S...

 forced a broad recognition of a financial crisis in both the US and world capital markets
Late-2000s financial crisis
The late-2000s financial crisis is considered by many economists to be the worst financial crisis since the Great Depression of the 1930s...

. As Lehman Brothers' failure temporarily reduced financial capital's confidence, a number of newspaper articles and television programs suggested that the failure's possible causes included the conflict between the CFTC and the other regulators.

Born declined to publicly comment on the unfolding 2008 crisis until March 2009, when she said: "The market grew so enormously, with so little oversight and regulation, that it made the financial crisis much deeper and more pervasive than it otherwise would have been." She also lamented the influence of Wall Street lobbyists on the process and the refusal of regulators to discuss even modest reforms.

An October 2009 Frontline documentary titled The Warning described Born's thwarted efforts to regulate and bring transparency to the derivatives market, and the continuing opposition thereto. The program concluded with an excerpted interview with Born sounding another warning: "I think we will have continuing danger from these markets and that we will have repeats of the financial crisis -- may differ in details but there will be significant financial downturns and disasters attributed to this regulatory gap, over and over, until we learn from experience."

In 2009 Born, along with Sheila Bair of the FDIC
Federal Deposit Insurance Corporation
The Federal Deposit Insurance Corporation is a United States government corporation created by the Glass–Steagall Act of 1933. It provides deposit insurance, which guarantees the safety of deposits in member banks, currently up to $250,000 per depositor per bank. , the FDIC insures deposits at...

, was awarded the John F. Kennedy Profiles in Courage Award in recognition of the "political courage she demonstrated in sounding early warnings about conditions that contributed to the current global financial crisis". According to Caroline Kennedy
Caroline Kennedy
Caroline Bouvier Kennedy is an American author and attorney. She is a member of the influential Kennedy family and the only surviving child of U.S. President John F...

, "...Brooksley Born recognized that the financial security of all Americans was being put at risk by the greed, negligence and opposition of powerful and well connected interests... The catastrophic financial events of recent months have proved them [Born and Sheila Bair] right." One member of the President's working group had a change of heart about Brooksley Born. SEC Chairman Arthur Levitt stated "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", adding that "I could have done much better. I could have made a difference" in response to her warnings.
In 2010, a documentary film Inside Job
Inside Job (film)
Inside Job is a 2010 documentary film about the late-2000s financial crisis directed by Charles H. Ferguson. The film is described by Ferguson as being about "the systemic corruption of the United States by the financial services industry and the consequences of that systemic corruption." In five...

 further alleged that the crafting of derivatives regulation was flawed from the Clinton administration on. Along with fellow whistleblower, former IMF Chief Economist Raghuram Rajan
Raghuram Rajan
Raghuram Govind Rajan is currently the Eric J. Gleacher Distinguished Service Professor of Finance at the Booth School of Business at the University of Chicago. He is also an honorary economic adviser to Prime Minister of India Manmohan Singh and the current President of the American Finance...

, who was also aggressively rebuked by the economic establishment, Brooksley Born was cited as one of the marginalized voices arguing that financial derivatives increase economic risk.

Personal life

Born is married to Alexander E. Bennett (also retired from Arnold & Porter
Arnold & Porter
Arnold & Porter LLP is a nine-office international law firm based in Washington, D.C. Arnold & Porter is well known for its trial, corporate, and antitrust work, and for its pro bono commitments and support for liberal causes.-History:...

). She has five adult children - two from a previous marriage to Jacob Landau
Jacob Landau
Jacob Charles "Jack" Landau was an American journalist, attorney, government official, and free-speech activist. He was the founding first Executive Director of the Reporters Committee for Freedom of the Press....

 and three stepchildren. Notably, Born was named a partner at Arnold & Porter while working part time so she could raise her two young children. When both of her children were school-age, Born returned to practice full-time.

External links

Speeches and statements