In Fed We Trust by David Wessel Is A Must-Read
I just returned from hearing The Wall Street Journal's David Wessel present his new book, In Fed We Trust, at Politics and Prose bookstore. I'm biased because I've known David for a long time, from the days when we both worked on Capitol Hill, but I doubt you'll find a more lucid or better written history and analysis of the financial crisis than David's. In an August 9 review, The New York Times went so far as to call it a "thriller." David just expressed some anxiety that such plaudits might build readers' expectations so high that they'd be disappointed. Don't worry, you won't be.
First, he builds clear and memorable characterizations of the key players, starting with Fed Chairs Ben Bernanke and Alan Greenspan and Treasury Secretaries Hank Paulson and Tim Geithner. They obviously granted David a lot of access, richly deserved as evidenced by David's two Pulitzer prizes.
Second, he carries the suspense to the end. Are we going to get out of this financial disaster? I won't spoil it for you.
Third, David's ability to simply and concisely explain the complicated financial transactions that got us into this mess and the government's complicated financial transactions that will hopefully get us out of it is unparalleled.
Finally, David presents the conflicting goals and interests, particularly in how Mr. Bernanke had to save Wall Street in order to save Main Street. If you don't believe that's true, you must read this book. If you do, you should still read it.
Gov't to get us out
The NYT review gives the impression Wessel finds all the causes and villains for the crisis in the events and decisions of just the past few years, the "libertarian" leanings of Alan Greenspan most conspicuous among them. No account that leaves out the effect of the Community Reinvestment Act (CRA), which led to the abandonment of traditional lending standards and created the sub-prime market during the 1990's, is possible. One statistic makes the point: homeownership rates rose from the post-war average of around 64% in 1994 to 69% in 2003. That incremental 5% were the sub-prime borrowers who shouldn't have purchased a home but helped push up prices to the bubble levels and then defaulted. No account that leaves that out will enlighten readers.
No account that leaves out
No account that leaves out CRA....is possible ?
Sure it is!!!
And one might also note that financial crises have been around since well before the CRA. Its not fundamental to how they develop, notwithstanding emerich's protestations. Dig deeper.