REVIEWS
POST NEARLY MORTEM
It’s not unusual to hear someone say a workday consisted of “putting out fires.” But few who toss around the phrase have spent months trying to control a conflagration like the one the 2007-08 credit market collapse caused. In this brief book a former Federal Reserve Bank chairman and two ex-Treasury secretaries explain how they kept the banking sector from tanking and taking along the national and global economies. For historians and survivors of the era’s financial crises, this book offers a valuable insiders’ view of what it took to avert a second Great Depression, notably controversial bailouts of the largest investment banks in the transition from the Bush to the Obama administrations. Business-class flyers will find Firefighting a transcontinental page turner.
Along with their thrill-a-minute chronicle, the authors try to rationalize rescuing major Manhattan investment banks. That defense may not succeed—not because the authors are wrong, but because they are addressing fellow insiders, not a public appalled by the notion that anything can be “too big to fail.”
Credit between investment banks—which constantly make and take overnight or shortterm loans to cover temporary negative balances—is a lubricant, like machine oil. Drain the crankcase, and the pistons freeze. In their apologia, the authors repeatedly note that America ended up making money on those emergency government loans, but even if that had not occurred the undertaking would have been necessary and worthwhile.
In explaining the crisis,
