FCIC, Warren Buffett, and Brooksley Born

I think I learned the most from listening to the exchange between Warren Buffett and Brooksley Born yesterday (Jun 2, 2010) at the FCIC (Financial Crisis Inquiry Commission) hearing (video segment starting at about 1:59:36).

This 1982 letter is also worth reading.

P.S. On a personal note, Ms. Brooksley Born has earned my deep admiration in the last months as I learned the foresight she had and the way she had conducted herself.

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March 15, 2011 Update: Check out this must listen “FCIC STAFF AUDIOTAPE OF INTERVIEW WITH WARREN BUFFETT, BERKSHIRE HATHAWAY” from FCIC’s resource library. [HT Alex CNBC] Plus a transcript of the interview (scribd PDF download) created by Santangel’s Review.

The Warning (PBS documentary) – Brooksley Born

“In the mids of the 1990s bull market, one lone regulator warned about derivatives’ dangers — and overnight became the enemy of some of the most power in Washington …“

Watch the trailer below. Watch the full program online at PBS, highly recommended.

P.S. Here is an excerpt from Frontline’s interview with Ms. Brooksley Born,

Q: You really thought something bad could happen, would happen?

A: Yes. LTCM was the sort of thing that I was concerned about. I did not foresee then the kind of pervasive and enormous collapse that we’ve experienced in the last year, partly because the market wasn’t that big yet, partly because I didn’t realize until LTCM happened how pervasive the contagion could be.

Q: And how pervasive could it be?

A: I think it could include thousands of financial services industry participants and other large institutions all over the world. And I think that’s what happened. As the market continued to grow, with even less oversight and regulation, until it reached more than $680 trillion in notional value, an enormous potential for disaster had grown.