In FED We Trust

July 1, 2009
As the central bank of the U.S., the Federal Reserve sets interest rates and provides liquidity to banks in order to provide stability to the financial system. When the financial meltdown that began in 2007 led to the unprecedented failures of Bear Stearns, Fannie Mae and Freddie Mac, AIG, WaMu, and Lehman Brothers, the Fed was called on to take a much larger role, essentially becoming an independent fourth branch of the government. It is often said that the Fed chairman is the second most powerful person in the world, and when Alan Greenspan left the post in 2005, his successor, Ben Bernanke, along with Treasury Secretary Hank Paulson, would soon face problems that were far more challenging than those of Greenspans tenure. Wessels account is a history of the Fed, a biography of Bernanke, and a blow-by-blow account of the decision-making process that took place as Bernanke and Paulson used desperate measures to try to right a rapidly sinking ship. Bernanke failed to anticipate the severity of the financial downturn, but perhaps he did the best that any man could be expected to do.(Reprinted with permission of Booklist, copyright 2009, American Library Association.)