• Washington Monthly
It is all in direct line of descent from J. P. Morgan’s epic rescue of the Trust Company of New York in the panic of 1907—a comparison Wessel does not neglect to draw.
Perhaps the right thing to do would have been to put several large institutions through receivership, if not last September then from the start of Obama’s presidency in January 2009? Looking narrowly at monetary policy, perhaps Bernanke and company are wrong that their zero-interest policy helps stimulate activity: no one wants the cheap funds, while low rates reduce income from interest, cutting into spending power. Perhaps it would have been better to keep interest rates up, and to double or triple direct federal spending on investment, in support of state and local budgets and of private purchasing power. Perhaps the right thing would have been less focus on saving banks, and much more on saving jobs, families, and homes.
We will not know for sure, because our leaders did not take this path.
Finally, there is a question of character. David Wessel’s method is to treat each of his major protagonists as an upstanding public servant, hardworking and incorruptible. I do not criticize this approach; otherwise he could not have written the book, and anyway, Wessel is convinced that this view is correct, and there is plenty of evidence—long hours worked, hard decisions made—that supports it. In the history of George Bush’s presidency, no one will confuse Bernanke, Paulson, and Geithner with, say, Michael Brown of FEMA or Paul Wolfowitz and the others who planned the invasion of Iraq.
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