Order On the Brink: Inside the Race to Stop the Collapse of the Global Financial System

Why did the Bush administration authorize those bailouts? Why did Henry Paulson (former Secretary of the Treasury) and other bureaucrats plead for unprecedented government intervention during the 2007-2008 financial crisis? That is the subject of this book, which amounts to an impassioned and yet clearly stated case for the major government initiatives during the crisis and Paulson's involved role in it all. Paulson argues that the nature and cause of the crisis - banks and other financial institutions growing beyond the bounds of existing regulations and safeguards and engaging in unscrupulous lending practices among other things - necessitated the special government steps to stabilize the market. Reading this book, one is just about won over by the logic, expertise, and affability with which Paulson presents his case. He convincingly persuades the reader of his good intentions and obviously seems to know thoroughly the complex workings of the financial world. Paulson states again and again that TARP and the bailouts were painful but necessary steps in order to stave off another Great Depression and protect the average American tax payer and investor from financial cataclysm. One thing that he addresses far less often is the matter of real change. He repeatedly explains why he advocated the band-aid approach (fixing the symptoms), but mostly goes little beyond this until the very end, where he only briefly suggests ways of actually getting inside and doing some surgical work on the system so that future risk is diminished. I found this to be the most serious flaw in Paulson's case. He admits that the crisis came on as a result of politicians, businessmen, and others ignoring mounting issues until they morphed into almost untenable problems. I saw little evidence here that Paulson made any significant effort to introduce or plead for real reform during the events he describes. If Paulson and other experts are to justify the kind of faith we're often told to place in them, they need to go beyond putting out the fires. They need to first strive during a crisis to introduce steps that would better the system itself, and then explain them afterward. All in all, one will learn a lot from this book and even sympathize with why Paulson acted in the manner that he did. But perhaps the reader will lose a little faith in experts who should aim to leave behind a better system, not just an averted catastrophe.Get more detail about On the Brink: Inside the Race to Stop the Collapse of the Global Financial System.