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The Fed: The Inside Story of How the Worldís Most Powerful Financial Institution Drives the Markets by Martin Mayer


Recommendation: - - - (Take a pass)



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Iíve never liked Martin Mayerís writing much. Nothing in his latest book, The Fed, changed my mind. Mayer epitomizes the Washington insiderís favorite approaches: name-dropping; personal experiences trump facts; the world is divided into the good and the bad and Iíll tell you which is which. Reading The Fed will give you Mayerís version of people and history, but donít count on his opinions becoming the authoritative ones. Heís often very mistaken, and sloppy with facts. He recycles what others have said and tries to translate it for a wide audience, punctuated with his own judgments, whether well-informed or not. I can picture the deck of index cards Mayer used to assemble this book: a thousand quotes, three or so to a page, interspersed with his comments about the quotes. If Henry Mitchner is your idea of quality fiction author, then Martin Mayer is the writer youíll appreciate for a financial story.

This irritating and annoying book will cause some people mentioned to wince. I know Preston Martin, whose name and situation Mayer drops several times. I doubt that heíll enjoy this depiction:

ďIn early 1982, Fred Schultz, a Florida banker, resigned as vice chairman of the Fed and returned to his bank, and Reagan appointed to the post Preston Martin, a tall, bony, cool drink of water from California, the former builder and college professor who had been chairman of the Federal Home Loan Bank Board in the first Nixon administration. On leaving the bank board, Pres had founded a mortgage insurance company that he sold to Sears, and in 1981, footloose and fancy free, he became a commissioner on the Presidentís Commission on Housing. I was a commissioner too, and saw a fair amount of Pres, who was a good ally to have when you agreed with him, a man of dry wit and irreverent attitude if conventional views. He persuaded me, much against my better judgment to vote with him in approving direct investments in real estate by insured S&Ls, because I felt I didnít know enough to refute his argument that without a sizeable equity share in the enterprises to which it lent money, an S&L could not survive in a world where interest rates were on a roller-coaster. Pres left the Housing Commission in 1982, when Reagan appointed him vice chairman of the Fed, and he assumed that he would succeed Volcker when Volckerís term expired the next year. As a housing man, he made no bones of his belief that monetary policy was too tight, which endeared him to the yahoos in the White House (and to William Greider, who made him a hero in his book Secrets of the Temple), but added to the insidersí perception that he lacked the gravitas for the chair.Ē

My guess is that Pres concluded that Mayer lacked gravitas and refused to suffer him gladly in their interactions. I think Greiderís portrayal of Preston Martin matches the facts better than Martin Mayerís. Other minor errors that I noted in the text led me to conclude that Mayer was sloppy, and didnít receive knowledgable editing. The attraction of an ďinsider storyĒ is learning what really happened. This book is a reminder that it all depends on who the insider is.

The many pages of history in this book are presented in a breezy approach that reminds the reader through every page that Mayer is not a historian. I canít think of a single reason to recommend this book. Take a pass.

Steve Hopkins, June 14, 2001


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