Fed Up

Did Ben Bernanke really save America's financial system?

By James K. Galbraith

David Wessel’s new account of the Great Crisis, In Fed We Trust, has many merits: it is timely, well written, and informative. The protagonists—Ben Bernanke, Henry Paulson, and Timothy Geithner—were faced in September 2008 with a supreme challenge. Wessel gives us, without judgment, a narrative of what they did. As history, this is first-draft stuff, but it’s as good a first draft as one could hope for, less than a year after the events it describes.

Wessel begins with the collapse of Lehman Brothers, as the crisis climaxed. We see the government acting as the ultimate investment banker, an ur-manager for the too-big-to-fail. Bernanke, Geithner, and Paulson shuttle between New York and Washington, send signals, urge Lehman to find a buyer, court Bank of America and then Barclays, and pressure other Wall Street CEOs to join a deal. 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.