Frontline recounts 'The Warning'

After watching the "Frontline" documentary "The Warning" (9 tonight, WQED), I still can't explain over-the-counter derivatives, but the one-hour program does a fantastic job exploring their role in the recent economic meltdown and how it could have been mitigated.

Written and directed by Michael Kirk, "The Warning" explores how the arrogance of federal regulators, including long-time Federal Reserve Chairman Alan Greenspan allowed them to ignore the warnings of concerned bureaucrat Brooksley Born.

I didn't know much about Greenspan -- except that he's married to NBC's Andrea Mitchell -- and it's fascinating to learn he was a disciple of Ayn Rand, who believed in no government regulations on the economy. Interviewees say Greenspan even decried federal regulator investigations into fraud.

When Born, as head of the Commodity Futures Trading Commission, expressed concern about the house of cards derivatives were creating throughout the financial sector, Greenspan and former Treasury secretary Robert Rubin and former assistant Treasury secretary Larry Summers shot her down. (Rubin is now one of President Obama's chief economic advisers.)

It might be easy-to-suspect that "The Warning" is some sort of anti-Republican partisan take down of big business, but Born was an apointee of President Clinton. One of those who opposed Born, former SEC Chairman Arthur Levitt, ends up singing her praises. (SPOILER ALERT: Even Greenspan, who refused "Frontline" interview requests, acknowledges to Congress that he was wrong and that there is need for government regulation.)

"It was my worst nightmare coming true," says Born of the recent financial crisis. She resists the temptation for "told ya so" retaliation by refusing to comment on her meetings with Greenspan back in the '90s. "Nobody knew what was going on in the market. The toxic assets of many of our biggest banks are over-the-counter derivatives and caused the economic downturn that made us lose our savings, lose our jobs, lose our homes. It was very frightening."

As it so often does, "Frontline" probes the headlines for the story behind the news and comes up with a sobering portrait of federal mismanagement that, according to the film's closing narration, has yet to be rectified.