In FED We Trust: Ben Bernanke's War on the Great Panic |  | Author: David Wessel
Publisher: Crown Business
Category: Book
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Rating:  55 reviews
Sales Rank: 11,506
Media: Paperback
Edition: Reprint
Pages: 352
Number Of Items: 1
Shipping Weight (lbs): 0.6
Dimensions (in): 8 x 5.3 x 0.9
ISBN: 0307459691
Dewey Decimal Number: 338
EAN: 9780307459695
ASIN: 0307459691
Publication Date: August 3, 2010
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Product Description
âWhatever it takesâ
That was Federal Reserve Chairman Ben Bernankeâs vow as the worst financial panic in more than fifty years gripped the world and he struggled to avoid the once unthinkable: a repeat of the Great Depression. Brilliant but temperamentally cautious, Bernanke researched and wrote about the causes of the Depression during his career as an academic. Then when thrust into a role as one of the most important people in the world, he was compelled to boldness by circumstances he never anticipated.
The president of the United States can respond instantly to a missile attack with Americaâs military might, but he cannot respond to a financial crisis with real money unless Congress acts. The Fed chairman can. Bernanke did. Under his leadership the Fed spearheaded the biggest government intervention in more than half a century and effectively became the fourth branch of government, with no direct accountability to the nationâs voters.
Believing that the economic catastrophe of the 1930s was largely the fault of a sluggish and wrongheaded Federal Reserve, Bernanke was determined not to repeat that epic mistake. In this penetrating look inside the most powerful economic institution in the world, David Wessel illuminates its opaque and undemocratic inner workings, while revealing how the Bernanke Fed led the desperate effort to prevent the worldâs financial engine from grinding to a halt.
In piecing together the fullest, most authoritative, and alarming picture yet of this decisive moment in our nationâs history, In Fed We Trust answers the most critical questions. Among them:
⢠What did Bernanke and his team at the Fed knowâand what took them by surprise? Which of their actions stretchedâor even ripped throughâthe Fedâs legal authority? Which chilling numbers and indicators made them feel they had no choice?
⢠What were they thinking at pivotal moments during the race to sell Bear Stearns, the unsuccessful quest to save Lehman Brothers, and the virtual nationalization of AIG, Fannie Mae, and Freddie Mac? What were they saying to one another when, as Bernanke put it to Wessel: âWe came very close to Depression 2.0â?
⢠How well did Bernanke, former treasury secretary Hank Paulson, and then New York Fed president Tim Geithner perform under intense pressure?
⢠How did the crisis prompt a reappraisal of the once-impregnable reputation of Alan Greenspan?
In Fed We Trust is a breathtaking and singularly perceptive look at a historic episode in American and global economic history.
From the Hardcover edition.
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Showing reviews 1-5 of 55
 A fascinating look at the Great Panic of 2008 (and beyond) August 31, 2010
Nancy Loderick (Boston, MA)
1 out of 1 found this review helpful
At last a book that uses plain English to explain the financial meltdown of 2008. You don't need a PhD in Economics to understand what happened. Bear Stearns bailout, Lehman Brothers losses, AIG rescue, bank re-caps - this book explains it all so that the average person can understand what happened. If you're looking for a detailed analysis, this isn't the book for you.
What I learned from this book:
**a greater understanding of Ben Bernanke as a person and not just a figurehead. As Chairman of the Federal Reserve Board, he's one of the most powerful men in the U.S. Yet, his ego didn't drive his decisions. I really felt that he tried to do what was best for the country.
**the causes of the financial crisis are many and complex. Sure, you can sum it up in a word - greed. But to look beyond that and see the inter-relationship of low interest rates, easy credit and investors looking for higher returns and becoming ever more willing to take risk. We had so many years of prosperity, many think it will last forever. Well, it doesn't.
**studying the past can help with the present. Ben Bernanke is an avid student of the Great Depression. He's one smart guy and his knowledge helped him stay calm during this whole saga. Wall Street has always been a place of excesses. It seems as soon as regulations are put into play, the Wall Streeters come up with new and ever-more complicated financial products to get around the regulations and give investors high returns.
**sometimes all your choices are bad and you must pick the lesser of two evils. Many people are very angry at Wall Street, myself included. I've experienced unemployment and my blood boils when I read about the exorbitant bonuses paid to executives of AIG and the like. I don't like thinking about the companies that the government bailed out with taxpayer dollars. But after reading this book, I can start to understand that the bailout might have been the lesser of two evils. Would the financial markets have crashed? Maybe, maybe not.
I love books that keep me thinking, even long after I've finished reading them. In Fed We Trust is such a book. I'm still pondering the following:
**Did Ben Bernanke succeed or was he a failure? David Wessel presents both sides of this.
**What have we learned from all this? I so wish I was back in business school and could study this full-time. Oh well, I will have to do this on my own.
I highly recommend this book to anyone wanting to understand better what led up to and what happened during the Great Panic of 2008. Even if you believe that Ben Bernanke and the Fed failed in their roles, you will get something from this book.
Less Boring Than Dentistry September 8, 2009
Etienne ROLLAND-PIEGUE (Tokyo, Japan)
7 out of 10 found this review helpful
Keynes once said that central bankers should strive to be as boring as dentists. In the past couple of years, central banking has certainly been less boring than dentistry. Observers and pundits were certainly not bored by Alan Greenspan, to whom George W. Bush bid farewell after his nineteen years of service by noting, quite accurately, that he was "the only central banker ever to achieve rock-star status". Neither Greenspan nor his successor Ben Bernanke were flamboyant characters, but they attracted a degree of public attention that underscore the importance of their role in the functioning of the US economy. And never was this role more important than during the great financial panic that forms the focus of David Wessel's book. As Bernanke commented, "We came very, very close to a financial meltdown, a situation in which many of the largest institutions in the world would have failed, where the financial system would have shut down, and in which the economy would have fallen into a much deeper and much longer and more protracted recession."
The book has a strong behind-the-scenes flavor. There are lots of personal details and anecdotes on the main characters, which help to understand how they reacted in an unprecedented time of crisis. The author had extensive access to high ranking officials, including Bernanke, Paulson and Geithner, and interviewed many lower-ranking individuals "whose carriers would not be advanced by the disclosure of their names", as he puts in the acknowledgements section. Many stories or comments were not intended for the record, and there are several exclusive renderings that will change the public's perception of the crisis. Here are some examples:
. Lehman Brothers could have been saved from bankruptcy on September 14, 2008, were it not for the stubbornness of the British Financial Services Authority. Paulson and Bernanke had found a British white knight as Barclays was ready to buy Lehman and to guarantee all of its liabilities. But stock-exchange listing rules required a shareholders vote and the FSA refused to grant a waiver. Barclays later bought pieces of Lehman at a much discounted price.
. The US financial regulator slept while the fate of Bear Sterns was being decided. Christopher Cox, the former California congressman who was chairman of the Securities and Exchange Committee and ostensibly Lehman's regulator, wasn't privy to the 4:45 conference call that Geithner convened to settle the fate of the investment bank. Hours later, a SEC staffer sent plaintive email messages to the Treasury and the Fed, begging someone who had been on the call to contact Cox and fill him in.
. Paulson convinced JPMorgan that it was paying too much, not too little, for Bear Sterns. JPMorgan's CEO was thinking of offering $4 or $5 for a share, but Paulson, who wanted Bear Sterns' shareholders to feel the pain, told him that his bidding price "sounded high" and talked him into reducing it to $2. The LA Galaxy soccer team signed David Beckham, the British soccer superstar, for a price higher than what JP paid for Bear.
There are some passages that I found baffling. When he was chairing the Council of Economic Advisers, Bernanke had a discussion with President Bush on oil prices. The president was complaining that "speculators" were driving up the price of oil and making markets more volatile, which is a commonly held view. However Bernanke quietly but firmly disagreed, telling the president that "every study he knew suggested that speculators dampen, not amplify, the volatility of oil prices". Considering Professor Bernanke's academic credentials, I would be tempted to believe him. But then economists should make greater efforts at explaining to the public and to politicians why oil prices vary so widely and what role market actors play in oil price formation.
Another surprising point, at least in retrospect, was the lack of international coordination on banking and financial issues that have a systemic impact beyond borders. Christine Lagarde, the French finance minister, learned about the collapse of Lehman in the press, like everybody else, and declared with much clearsightedness that the decision was "horrendous", "a genuine error". Conversely, the head of the French central bank didn't bother to call the US when it was discovered that a rogue trader at Société Générale had accumulated losses of $7 billion, sending big ripple effects on the markets when the positions were unwound. G7 meetings, where international coordination is supposed to take place, are seen by insiders as "mostly ritualized recitations of positions already expressed publicly". Paulson found these meetings tedious and unproductive, and generally used the word "G7" as a term of contempt. It was all the more surprising when a memo written by Bernanke to clarify his views became the focus of the discussion on the October meeting following the Lehman shock and found its way in the final G7 communiqué.
The book's message, as stated on the cover, is that the Federal Reserve has become the fourth branch of government, a branch where unelected officials can spend up to $800 billion without democratic oversight or accountability. But reading the chapters makes it clear that the Fed has to obey many rules and regulations, and that legal constraints often hampered its capacity to react to the crisis. The Federal Reserve Board's chairman and the presidents of the Federal Reserve Banks also have to testify regularly before Congress, and judging by the way they are grilled by the chairs of the Senate Banking Committee or the House Financial Services Committee, these hearings are serious matter. They are also for the record, whereas the minutes of the Federal Open Market Committee are released only after five years. Future historians will be able to use these records to paint a fuller picture of the financial panic of 2008-2009. But there is no doubt that they will also use David Wessel's book as a reference to understanding what really did happen behind the scenes.
A triumph in putting together these last two years of economic chaos September 8, 2009
promethian Daniel (Naples, FL United States)
6 out of 9 found this review helpful
I am surprised at some of the negative reviews. This is well written anthology of the last two tumultous years, perhaps the largest economic calamity in generations. It tells who knew what, when, and what the big players (Bernacke, Paulson in particular, as well as others) were thinking, saying, and doing. It lets you know their posturing, strategy, and actions. I have a better understanding after reading this book, even though I am an avid follower of the financial markets because the book really does a good job "connecting the dots". This book would be the good basis of a television documentary series and I hope this happens. If you click on my previous reviews, you will see that I am a fairly tough grader, and I give this five stars.
Spectacular! PERIOD!!! November 11, 2009
William Dahl (Redmond, OR)
4 out of 6 found this review helpful
Spectacular! PERIOD!
Perhaps the best non-fiction financial thriller for 2009 from the mind of David Wessel, the Economics Editor of the Wall Street Journal. The essence of the book is captured in the following quote from Federal Reserve Chairman Ben Bernanke:
"The only case for an independent central bank in a democracy is that it can take a longer view and do what is in the interest of the people in ways that elected politicians cannot." P. 271
Bernanke, Paulson, Geithner and Summers - Where did these guys come from? How do they think? How do/did (Paulson) they work with one another when faced with the most unimaginable economic crisis since the Great Depression? It's all here.
Why? Why did the U.S. and the global economy fall into this crater. Why? Why has the Federal Reserve, The U.S. Treasury and the White House Economic Advisory team implemented the measures they have - thus far?
The manner in which this work evolves makes is a contribution that can be devoured by a broad audience. It is absolutely essential reading for U.S. citizens who yearn for a vastly more informed perspective on the questions posed above.
Spectacular! PERIOD!
Excellent examination of the Fed during the Great Panic November 1, 2009
Scott (Atlanta, GA USA)
2 out of 3 found this review helpful
Having watch the Great Panic (as Wessel calls it) as it unfolded and hearing all the business TV talk that went along with it, I've been waiting to read all the inevitable books that I knew would be coming out. This is the first one I picked because of the power and influence the Fed possesses. After reading this, I realize that very few people really knew how much power the Fed actually does, thankfully, possess. And while I knew already that what I see on TV isn't necessarily representative of what is going on behind closed doors, this book just helped cement that knowledge.
If you are looking for an overall examination of the crisis and it's players, this isn't the book for you. There probably won't be a book for you because this crisis involved multiple players in both the private, public, and quasi-public sectors that an overall book end up being thousands of pages long.
What this book does do is give an excellent examination of one the major institutions involved in the crises, how the people there dealt with what they saw and thought was happening, and how inadequate those assessments were. You get a blow by blow of the behind the scenes conversations, debates and theories on how the Fed should react. You see the major players - Bernanke, Paulson, Geithner, and Warsh - and how the interact with each other and the public. Wessel also gives some details on how the other Fed Presidents and Governor's reacted to what Big Big and his compatriots were doing.
Wessel also gives some history into the Fed such as why it was formed, what powers it has been given and taken away over the years, and exactly how the Fed completely screwed up in 1929.
I highly recommend this book. If you know alot about the Fed you'll get to see it in action from a behind-the-scenes point of view. If you don't know alot about the Fed, you'll get a great education into this institution and just how important it is to the US economy.
Showing reviews 1-5 of 55
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