In FED We Trust: Ben Bernanke's War on the Great Panic Hardcover – Deckle Edge, Aug 4 2009
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“...gives a revealing blow-by-blow account of the recent financial crisis”
—David Brooks, The New York Times
“...essential, lucid—and, it turns out, riveting—reading."
—Michiko Kakutani, The New York Times
“...a tale that’s nothing short of hair-raising..reveals in scary detail how unprepared politicians and regulators truly were...”
—Paul M Barrett, The New York Times Book Review
“Wessel delivers an engrossing account of Bernanke's improvisational responses to the worst financial crisis since the Great Depression.”
“... so far the most entertaining and most readable book on the financial crisis.”
—Tyler Cowen, marginalrevolution.com
“...persuasively told and richly reported... It will win awards and inspire copycats.”
"David Wessel brings his deep knowledge of the Federal Reserve and U.S. politics and economics to a topic that will be studied by historians for decades to come...No one can understand what happened and what did not happen without reading this book."
–Joseph E. Stiglitz, winner of the Nobel Prize in economics and author of Globalization and its Discontents
About the Author
DAVID WESSEL is the economics editor of The Wall Street Journal and writes the Capital column, a weekly look at the forces shaping living standards around the world. David has shared two Pulitzer Prizes, one for Boston Globe stories in 1983 on the persistence of racism in Boston and the other for stories in The Wall Street Journal in 2002 on corporate wrongdoing. He appears frequently on National Public Radio and is a regular on PBS’s Washington Week.See all Product Description
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Wessel is the economics editor at the Wall Street Journal and appears to have had a great deal of access to Bernanke and Geithner. His insider's perspective unfortunately produced very little insight. You can learn (p.115 AND p.192) that Bernanke used a "Polycom" speakerphone, but not that Hank Paulson and Richard Fuld were bitter rivals.
On a more substantive level, the book continually updates a "dashboard" with the Dow Jones average and the market cap of Citigroup. The success of each intervention is judged by the reaction of the stock market, generally within the day, to the policy. Does Wessel not remember that the Dow hit an all time high in October 2007, six months after subprime problems had emerged at Bear Stearns?
There is almost no discussion of the complex, leveraged financial instruments (e.g. CDOs and CDS) that amplified the crisis and made traditional monetary policy ineffective. A more thorough account would have also explored the regulatory failure of the Fed and federal government prior to the crisis.
On balance, the book is too narrow for someone just trying to go beyond the headlines and too superficial for those looking ahead to the next crisis.
The first inclination you have when you pick up this book is to dive in deep and fast to find out what went on in the minds of Bernanke, Paulson, and Geithner, among others. There must have been some amazing discussions, fraught with fear but Wessel never quite captures this for the reader to experience. Instead of providing a window into these men's thoughts / thought processes during this pivotal, riveting time, the book doesn't go far beyond merely reciting the actions they took, with some quotes from these men, scattered in as almost afterthoughts. [The footnote style is arguably incomplete with respect to some quotes.]
Overall disappointing. Wessels' cursory conclusions end up sounding rudimentary - likely attributable to what was probably a rush to publish and capitalize on the current curiosity-- which is understandable. But, there is still more to this subject. As of today's FOMC meeting, the Fed still hasn't started to unwind its actions. So, the book seems to be a bit early. Wessel even mentions that Hank Paulson is in the process of penning his own account of the economic crisis. Maybe Paulson will take us deeper into the minds of the big players during this frightful period, even if it is through his eyes, and not a third party's.
In addition, we learn a lot more about Timothy Geithner and Hank Paulson, the other two fascinating characters in this near-calamity.
Wessel is excellent at explaining the intricacies of the complicated, innovative--but ultimately poisonous--instruments that were partially to blame for the meltdown, as well as in translating "FedSpeak" so that the reader understands concepts like the Fed's discount window, how interest rates reverberate throughout the economy, and how there were fundamental changes in the very structure of our financial system that were difficult even for bankers, economists and the best-educated politicians to decipher. What the Chairman of the Fed doesn't say is sometimes as important as what he does say. Bernanke is under the microscope, and this book explains what kinds of pressures are involved in his job.
What I most appreciate about this book is that it does not endeavor to demonize any of the major participants. Wessel is for the most part sympathetic to the efforts and intentions of the major players, although he definitely pulls no punches when pointing out where mistakes were made. And there were plenty, to be sure. He eunerates them in considerable detail (including stupendous goofs by Greenspan).
As a reader, I came away the feeling this was a very balanced, thoughtful and fair book. It also avoids the tawdly sensationalism and hysterical finger-pointing that pockmarks some of the other analyses of what occurred. Nor does it feel rushed, the way Gasparino's SELLOUT feels, or that there is some intense axe to grind, as disturbs some other potentially valuable works on this subject. Unlike some other books, this one seems focused rather than sprawling, cohesive rather than needled together with thread to meet a publishing deadline.
This is an excellent book that strikes a nearly perfect balance between analysis and exposition. What it may lack in immediacy, it more than makes up for in depth.
If this is a fast, easy and enjoyable read, it is also one-sided in how it recreates many key events, often taking the side of the officials dealing with the blow-ups, and not showing much of what was going on over at the corporates. This is a book about key personalities and brings together great quotes and chronologies around meetings. It is not about the institutions. Something is missing on the institutions, if this is going to be a balanced account.
Yet also what it does not do with many of the personalities is find too many faults with other than the fall guy for everyone... If Paulson is shown up for his investment banker, short attention span mentality, then the Geithners of the story are left to be seen crisis solving without showing how some of their original Grand Canyon size oversights allowed the mess to balloon in the first place.
I did enjoy reading the book, though, following my disappointment reading Ben Bernanke's Fed: The Federal Reserve After Greenspan...And my other recent disappointments going back to Greenspan's biography, as well so many other Fed category books.
The book does achieve a lot, despite the drawbacks. David Wessel has done a good job weaving the key government side characters (and there notably at least 2-3 of the four musketeers, Bernanke, Geithner, Warsh and Kohn). Greenspan is discussed just enough (ie, not too much to waste our time re-hashing old material).
But I will fault the writer for key omissions - even if he was focusing on doing a good job on the core personalities for the book. There is just about nothing on Goldman...There are a few small case studies such as on Citi's failed attempt to get Wachovia. But on the Citi case study, we only get about a four page description. We don't get any insight into the crisis at Citi and dealing with Citi's blackhole balance sheet, which surely was one of the larger scenes of the crime, and thus the crisis (and a company that was saved instead of one that fell apart... we really don't get a picture here...and of course Rubin and others, especially given Rubin's purported long term role in getting Geithner in as a player....For more related stories, the range goes from stories such as The Washington Post, 25 November 2008, Familiar Trio at Heart of Citi Bailout...to Pro Publica, 14 January 2009, How Citigroup Unraveled Under Geithner's Watch).
Of course, we do get a customary description on key blow-ups Bear and Lehman, and a little on AIG (and yet..., where is the discussion on Bernanke and others, and the decision process on paying 100% on dollar to banks - SocGen, Deutsche, Goldman and others - holding certain AIG products that in any normal situation would at the very least warrant a significant haircut!).
We really do need to shift to the Esquire piece on JP Morgan's tussle with Barclays on handling Post-Lehman issues, and also the New Yorker piece on the Lehman breakdown...
The last section of the book also falls off quickly. There are a few very recent updates from mid-09 as the book likely went to press, which is misleading because we are expecting some higher level of detail for events in 1Q09, which just aren't there...
If I had to bet, a lot more Fed and Washington people were talked to for the book than Wall Street people. We also need a Martin Mayer (author of The Fed, 2001) approach or others to updating the Fed's pirouettes with more historical perspective. If we don't get more objective presentations from authors - we will have to keep reading blogs and occasional feature pieces like the Rolling Stone, New Yorker or Esquire accounts...
A good book for the color gained on key events. But the rose colored glasses have a strong tint and narrow vision.