A history of major financial crises - and how taxpayers have been left with the bill.
In the 1930s, battered and humbled by the Great Depression, the US financial sector struck a grand bargain with the federal government. Bankers gained a safety net in exchange for certain curbs on their freedom: transparency rules, record-keeping and anti-fraud measures, and fiduciary responsibilities. Despite subsequent periodic changes in these regulations, the underlying bargain played a major role in preserving the stability of the financial markets as well as the larger economy. By the free-market era of the 1980s and 90s, however, Wall Street argued that rules embodied in New Deal-era regulations to protect consumers and ultimately taxpayers were no longer needed - and government agreed.
This engaging history documents the country's financial crises, focusing on those of the 1920s, the 1980s, and the 2000s, and reveals how the two more recent crises arose from the neglect of this fundamental bargain.
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Clear walk-through of US financial history, except
Here is a masterful mix of ideas, people, and events. The authoring and editing are superior. This produces a stream of lucid explanations of deep and important things, that really stick and make useful sense. Each sentence is well-crafted. There is a thoughfulness that calmly exposes the trade-offs of each side and each thing, rare in today's (or any day's) writing. So, the reader comes out comprehending banking, money, and the big debates of each time frame (leading up to today) with a clarity not found elsewhere (and I read at least a dozen financial history books, in print or audio, each year). The narration is a perfect match. Whatever wisps of bias one might find here, are transparent (so, respectful of the listener's intelligence), and the author never sacrifices a disciplined laying out of the foundations one needs to think for oneself. This book accomplishes what dozens of others strive at, and one way or another, fall short on.
My reservations (and 4 stars) are about the imbalance in the 20th and 21st century history part. The hint is in the title: "... tghe Struggle to Tame Wall Street." There is more to life, I contend, than "taming," and any society too tame or regulated has its own downsides. Innovation in finance as elsewhere often came from drawing outside the lines, sometimes more subtly and cleverly, sometimes less. The surviving bits made life better for many people, including me. The author may be right in trying to nudge toward good regulation, and to express agony at its absence, but I think it is done here by neglecting to elicit the different sides of the matter. As a result it becomes a continuous, if articulate, tapering into 4 + hours of righteous scolding. It is nobly done in the tradition of Brandeis, Woodrow Wilson, FDR (though more bitterly than FDR), and Elizabeth Warren. But that is half the story. If you want a good compilation of how many banks and ultimately pretty ordinary bankers got to pretty twisted practices, and how that fits in the surrounding environment of rules (and their gaps), it is here, and clear. But I like the balance of, say, Mervyn King in The End of Alchemy, who sees the energizing, creative and life-imparting sides of finance as well as its hazards. Even Robert Shiller, a very moral economist, in Finance and the Good Society (a title here), makes this balanced distinction. There is a rich and not at all trivial debate about how much we need to slow down and dumb down everything (or any particular thing) to make it easily used for the least capable (or least motivated) of us. That goes far beyond finance but it is exemplified here. That debate is completely absent here: it is taken for granted the most inarticulate person deserves the (quite socially costly) blank check of everyone's endless and absolute indulgence. There is a simplistic story of bad wolves devouring the good sheep. It is not that simple, IMO. nevertheless, let me close admiring the work done here.