Lecture 23 May 1 - Lecture 23 May 1 2014 Film Discussion...

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Lecture 23 May 1, 2014 Film Discussion Post-test The Warning Discussion Questions 1. What was the main disagreement between Brooksley Born and the President’s Working Group (PWG)? Born was pro government regulation and the PWG was pro free market. Greenspan disagreed with regulating fraud (thought that market would set it straight). 2. What steps did the other members of the PWG (e.g., Summers, Ruben, and Leavitt) take to ensure that Born was unable to regulate OTC derivatives? Summers told her to stop. Woman was convinced that they were sexist. The whole group got together to tell her to stop regulations. Went to congress against her. 3. According to the documentary, what role did the failure to regulate OTC derivatives play in the recent economic collapse? They didn’t have any information on the market and didn’t know that things were going wrong. 4. In this case, was “social welfare” optimized? If not, what steps could have been taken to optimize social welfare? What, in this situation, is social welfare (i.e., what outcome would have been in
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