I was asked earlier in the academic term if I would act as a 3rd-party reviewer of an independent study project being done by a student at the University of Rhode Island.Â The projectÂ has as its coreÂ former US Treasury Secretary Hank Paulson’s bookÂ On the Brink. Figuring that I probably shouldÂ know what Mr.Â Paulson saidÂ prior to making any comment or reaction to the student’s project, I’ve gone ahead and given the book a read. Since it’s something very market-related, I figure it might be of interest to readers of this blog, so here are my thoughts.
On the Brink is basically a diary of Paulson’s time as Treasury Secretary, which ran from 2006 to 2008. That, of course, encompasses the most dramatic period of the financial crisis, running from when things started coming unglued in 2007 to the point at the end of the Bush administration when the financial markets were just about finally stabilized.Â The bookÂ details the sequence of events which covers the Bear Stearns take-over, the Lehman collapse, the receivership of Fannie Mae and Freddie Mac, the AIG bailout, TARP and just about everything in between.
This is NOT a history of the financial crisis. Paulson doesn’t really get into the “How did we get here?” in any dedicated or focused fashion (for something more along those lines you may want to read Financial Shock by Mark Zandi). This book is Paulson telling the storyÂ of how Treasury, the Fed, the FDIC, the SEC, Congress, the PresidentÂ and others worked together to try to resolve the problems facing the financial markets during the time frame in question from his perspective. As such, one may be inclined to think of it as an individual trying toÂ establish his legacy. Perhaps it is, but I also found it to be a very honest telling. The book doesn’t shy away from Paulson’s insecurity at different points, or the impact the long hours and intense stress had. I didn’t come away from the book thinking Paulson had portrayed himself as the hero of the tale. If anything, he spends considerable time talking about the tireless work of the numerous people involved.
From a reading perspective, I found the book well-paced and fairly easy to get through in general terms. I think Paulson does a very good jobÂ of reflecting the uncertainty and rapid development of events during the time span in question. He also presents an interesting view of some of the major political movers of the time, many of whom are still involved in things today. We in the public don’t often get that sort of thing, as we mostly see the made-for-TV moments of press events and committee testimony.
On the negative side, my guess is that some subjects might trip up the reader who isn’t familiar with the deeper elements of the financial markets. The book could have probably done withÂ explanations at a few points to make things more clear for the lay person – like why short selling was so bad, why AIG was bleeding cash, etc. The lack of such explanations does not detract from the main narrative, but no doubt some readers would find them useful in helping understand why things were the way they were.
Overall, I think On the Brink is a very worthwhile read for those interested in understanding how things developed and progressed during the financial crisis.
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