Congress "ducked" on financial regulation, neglecting to solve the problems that caused the financial crisis, former SEC chairman Arthur Levitt said.
In an interview with the Street, Levitt, who now serves as a Goldman Sachs adviser, said the Dodd-Frank financial legislation, passed in July, accomplishes very little. It has left the regulatory bodies unfocused and ineffective, and it has failed to determine specific regulatory policy, he said.
In this Street interview Levitt neglects to mention that he also "ducked" on financial regulation -- when he teamed up with Alan Greenspan, Bob Rubin and Larry Summers to prevent Brooksley Born from regulating the OTC derivatives market.
However, to Levitt's credit, he confessed to his past "ducking" in PBS Frontline's documentary The Warning.
"I didn't know Brooksley Born," says former SEC Chairman Arthur Levitt, a member of president Clinton's powerful Working Group on Financial Markets. "I was told that she was irascible, difficult, stubborn, unreasonable."
Levitt explains how the other principals of the Working Group -- former Fed Chairman Alan Greenspan and former Treasury Secretary Robert Rubin -- convinced him that Born's attempt to regulate the risky derivatives market could lead to financial turmoil, a conclusion he now believes was "clearly a mistake."