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Summary
Summary
From the winner of the 2022 Nobel Prize in Economics
A New York Times Bestseller
"A fascinating account of the effort to save the world from another [Great Depression]. . . . Humanity should be grateful."--Financial Times
In 2006, Ben S. Bernanke was appointed chair of the Federal Reserve, the unexpected apex of a personal journey from small-town South Carolina to prestigious academic appointments and finally public service in Washington's halls of power.
There would be no time to celebrate.
The bursting of a housing bubble in 2007 exposed the hidden vulnerabilities of the global financial system, bringing it to the brink of meltdown. From the implosion of the investment bank Bear Stearns to the unprecedented bailout of insurance giant AIG, efforts to arrest the financial contagion consumed Bernanke and his team at the Fed. Around the clock, they fought the crisis with every tool at their disposal to keep the United States and world economies afloat.
Working with two U.S. presidents, and under fire from a fractious Congress and a public incensed by behavior on Wall Street, the Fed--alongside colleagues in the Treasury Department--successfully stabilized a teetering financial system. With creativity and decisiveness, they prevented an economic collapse of unimaginable scale and went on to craft the unorthodox programs that would help revive the U.S. economy and become the model for other countries.
Rich with detail of the decision-making process in Washington and indelible portraits of the major players, The Courage to Act recounts and explains the worst financial crisis and economic slump in America since the Great Depression, providing an insider's account of the policy response.
Author Notes
Ben Shalom. Bernanke was born on December 13, 1953 in Augusta, Georgia and was raised in Dillon, South Carolina. He has a Bachelor of Arts degree and a Masters in Economics from Harvard University and a Ph.d in in Economics from Massachusetts Institute of Technology. Bernanke taught at Stanford Graduate School of Business and New York University. He was a professor of economics at Princeton University. He served as chairman of the Federal Reserve from 2006 to 2014. Time magazine named him "Person of the Year" in 2009. Since leaving public servce he has changed his political affiliation from Republican to a moderate Independent. He and his wife Anna have two children.In 2015, his larest book, "The Courage to Act: A Memoir of a Crisis and its Aftermath," became a New York Times bestseller.
Reviews (2)
New York Review of Books Review
THE MEMOIRS OF Ben S. Bernanke, who succeeded Alan Greenspan as chairman of the Federal Reserve, are essential reading for anyone who wants to know exactly what happened at the Federal Open Market Committee meeting of Aug. 5, 2008. Or at each of the many other Federal Open Market Committee meetings from 2006 to 2014, Bernanke's years as chairman. Yes, the book is a bit of a slog, but it is undoubtedly the best account we will ever have of how government and financial institutions dealt with what has come to be known as the Great Recession. It's an odd term, isn't it? It invokes comparisons to the Great Depression and simultaneously suggests that: "Shucks, it wasn't all that great. Wasn't a depression or anything." But Bernanke is persuasive in arguing that (a) it was pretty damned great (i.e., terrible) and (b) he and his colleagues at the Fed deserve credit for the fact that it wasn't a heck of a lot greater. Bernanke, formerly a Princeton economics professor, also asks for and deserves credit for his pet cause of more openness - or, as we say now, "transparency" - at the notoriously secretive Federal Reserve. Alan Greenspan liked to cultivate an air of mystery. By the time Bernanke stepped down, the Fed chairman was holding four news conferences a year. The breathlessness with which Bernanke describes this development - four news conferences a year! - unintentionally proves his point. As Bernanke himself tells the tale, he perhaps came to enjoy wearing the crown overmuch. There are a few too many sentences like, "Afterward, my security team and I dropped Larry Summers off at his hotel." At the same time, there are far too few sentences containing the words "Larry Summers," which are generally a guarantee of interesting controversy. If you can't already tell the players without a program, Bernanke makes you read between the lines to suspect that he doesn't much like, for example, Sheila Bair, chairwoman of the F.D.I.C. "She could be turf-conscious and hard to work with," he writes, "but I also couldn't help but grudgingly admire her energy, her political acumen in pursuing her goals and her skill in playing to the press." Now that he has a memoir to peddle, Bernanke may regret his apparent - and apparently sincere - policy of having a nice word for everybody. For example, he has belatedly changed his mind about whether misbehaving bankers should have gone to jail; in recent interviews he's said he's for it, though there's not much evidence of that in the book. And when Bernanke decided to resign ("More than a decade in the Washington pressure cooker was enough"), President Obama asked his advice on a replacement. Bernanke writes: "I didn't want to influence his choice too much, since my support for any one candidate could easily be misrepresented as opposition to another." Since there is only one Fed chairman (or chairwoman), support for one candidate does, tragically, imply opposition not just to one but to all the others. No misrepresentation required. Bernanke never does tip his hand about who he thought should succeed him, but you get the feeling his candidate was not Summers. The time and energy Fed policy makers spend worrying about the board's image and attempting to affect how its actions are interpreted does at first seem excessive compared with, for example, that of the Supreme Court. But the Supreme Court's work product is legal opinions, which are supposed to be tightly reasoned and to speak for themselves. Fed pronouncements, by contrast, are purposely - and to some extent necessarily - ambiguous. If the financial markets knew in advance precisely what the Fed intended to do (drive interest rates up, but not so far that you drive the economy back into recession; lower interest rates but not enough to spark inflation; etc.), doing it would be harder. Even a transparency enthusiast like Bernanke did not want to spill all the beans. Bernanke finds it ironic that Greenspan called his own memoir of his Fed years "The Age of Turbulence." Bernanke doesn't spell it out, or need to: "You wanna see turbulence, buddy? I'll show you turbulence." Bernanke's memoir is called "The Courage to Act" - a title that might also be labeled ironic because, although he generally chose to act in most of the crises he faced, it would have required an equal amount of courage, or even more, not to. By law, as Bernanke explains repeatedly (with a slightly exasperated tone), the Fed has what's called a "dual mandate": to protect jobs and also to protect the stability of the currency. Or, in other words, to maximize employment and minimize inflation. These goals are inherently contradictory, and the Fed has only a limited number of dials it can fiddle with to achieve the best possible combined result. Critics are always complaining that the Fed is favoring one of these goals over the other, or that it is going about one or the other goal the wrong way. The heart of "The Courage to Act" is a detailed but very lucid step-by-step explanation of each crisis Bernanke and the Fed faced during his tenure, from the collapse of Bear Stearns in 2008 to the continuing trauma over Greece and the euro that is still going on. In each case Bernanke lays out the problem and how it came about, discusses the pros and cons of various solutions, then tells us how it all was resolved - generally with a compromise, which Bernanke supports because he understands and appreciates the concerns of both sides. This is an excellent approach for a Fed chairman, but somewhat less desirable in a memoirist. The various crises usually boil down to similar story lines. Some institution or piece of the economy - big investment banks, the housing sector, the insurance company A.I.G., the auto manufacturers, Fannie Mae and Freddie Mac (the two giant government-chartered mortgage agencies) and so on - was in trouble. If the government stood by and did nothing, the result would be catastrophic not just for those directly involved but for the entire economy. However, to save people from their own mistakes creates "moral hazard" - meaning the risk of encouraging more of the undesirable behavior that caused the problem in the first place. If you bail out one reckless homeowner or one too-big-to-fail investment bank, what justification will you have not to bail out all of them? And what if they all conclude they can continue to pursue their reckless ways and the government will rescue them if necessary? BERNANKE MAKES A compelling case that in 2007 and 2008, the world economy came very close to collapse, and only novel efforts by the Fed (cooperating with other United States and foreign government agencies) saved us from an economic catastrophe greater than the Great Depression. Although he agreed with concerns about moral hazard, he concluded that in this particular case, too much was at stake to worry about it. He never really offers a theory or guidepost for deciding when traditional concerns like moral hazard should be put aside. During precisely the months in which all this was going on, we were conducting a presidential election campaign in which the looming catastrophe played almost no role. John McCain, the Republican candidate, was made to look like a fool for canceling appearances and rushing back to Washington at the height of the campaign, and finding nothing to do when he got there. Only long after the election did Congress take up the redesign of financial regulations for which the crisis had demonstrated a clear need. The Federal Reserve system is hard to justify in democratic terms. Except for a few cranks and obsessives, almost nobody can even explain how it works, let alone develop an informed opinion about the policies that emerge from it. Ben Bernanke fought for more openness at the Fed. It was a worthy fight and he won. But what good is transparency if almost everybody is looking the other way? If you bail out one homeowner or bank, what excuse do you have not to help all of them? MICHAEL KINSLEY is a columnist at Vanity Fair.
Library Journal Review
In this brilliant memoir, Bernanke (Essays on the Great Depression), one of America's foremost monetary economists, assesses his rise to chair the Federal Reserve, the massive financial crisis in 2008, and the Fed's strong and effective response. He served as chair from 2006 to 2014, and while working with presidents George W. Bush and Barack Obama, along with treasury secretaries Hank Paulson and Timothy Geithner, he used every means possible at the federal level to keep the U.S. economy from sinking. One is given a vivid perspective on the American economy, from Bernanke's arrival in Washington in 2002 and his experiences during the crisis to the Great Recession that followed. It is demonstrated how he and a few colleagues prevented an economic collapse of tremendous magnitude. Bernanke cut interest rates to almost zero, purchased treasury- and mortgage-backed securities, and provided federal loans to investment firms for the first time since the 1930s. He recognizes that he failed to lead the crisis in several ways, such as the ability to regulate banks and mortgages in an adequate manner. It is safe to say that the Federal Reserve changed substantially during Bernanke's tenure. Verdict One of the finest memoirs on the financial crisis to date, this title belongs in all libraries with holdings in economic and social history. Readers desiring further readings on the economic crisis might consult Alan S. Blinder's After the Music Stopped. [See Prepub Alert, 5/4/15; a 2015 Best Business Book, LJ 12/15.]-Claude Ury, San Francisco © Copyright 2015. Library Journals LLC, a wholly owned subsidiary of Media Source, Inc. No redistribution permitted.
