The derivative mess was obvious and entirely predictable. Indeed it was predicted by many knowledgeable observers. Years before the subprime and credit default swap problems began to unwind, the Daily Report was telling us about extensive fraud in connection with single-family real estate transactions in the Atlanta area.
Warren Buffet, George Soros, Gary Shilling, and Felix Rohatyn among others had seen it coming and had voiced publicly their concerns about subprime loans and derivatives. Despite the alarms raised by respected members of the financial community, Alan Greenspan, the chairman of the Federal Reserve Bank from 1987 to 2006, blocked efforts to enact legislation that would place reasonable regulations on derivatives. He was supported in these policies by then-Sen. Phil Gramm, chairman of the Senate Banking Committee, who praised Greenspan “as the greatest chairman in the history of the Federal Reserve Bank.”
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