THE FED

A somewhat dense, albeit informative, history and overview of the Federal Reserve System and its impact on the global economy.

Alan Greenspan, chairman of the Federal Reserve Board, has sheparded the US economy through the longest period of sustained growth in the nation’s history. Financial columnist (and Wall Street Journal contributor) Mayer’s analysis of the Greenspan era includes a history of the early stages of central banking in Europe and the US, highlighting the often-bitter struggles that took place between bankers and regulators for control of the central banks. Although this story has been told many times before, the author provides some new insights into the bureaucratic rivalries that have resulted in the Fed’s independence and extraordinary economic and corporate power. These rivalries have also, on occasion, given rise to near-comical financial transactions—such as a standoff that took place between the Federal Reserve and the Treasury in the early 1950s, resulting in the issuance of government bonds that were immediately purchased in toto by Fed officials who had opposed the issue. Mayer is a sharp observer, and he offers some blunt commentary on many of the players involved (referring to John Snyder, former Treasury Secretary under Truman, as a “total lightweight”), as well as an in-depth look at the differences in the development of American and European central banking systems. He offers a pretty thorough portrait of the Fed’s current role in the financial marketplace, describing the Fed’s wire system and supervisory functions (and sometimes losing the reader in an alphabet soup of government-agency acronyms). Anecdotal illustrations showing the Fed at its best and worst (such as its intervention in the markets following the 1987 crash and the failed supervision in 1998 of Long Term Capital Management) add some light and air to a fairly heavy work.

An in-depth (sometimes excruciatingly so) financial history of a complex organization.