Repo Run

What Really Happened by David Warsh

The effusion of books about the 2007-08 financial crisis has mostly run its course. Two new accounts by policy-makers who were sometimes in the room (Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street, by Neil Barofsky, who kept tabs on Treasury Department lending under the Troubled Asset Relief Program as its Special Inspector General; and Bull By the Horns: Fighting to Save Main Street from Wall Street and Wall Street from Itself 

Cutting-edge journalists, meanwhile, have moved on to the battles of Barack Obama’s first term: The New New Deal: The Hidden Story of Change in the Obama Era, by Michael Grunwald, of The Washington Post, explores the logic of the stimulus; The Price of Politics, by Bob Woodward, also of the Post, recounts the failed grand bargain negotiation of the summer of 2011; and Red Ink: Inside the High-Stakes Politics of the Federal Budget, by David Wessel, of The Wall Street Journal 

Much the best economics book on the fall calendar therefore (to be published next month) is a slender account about the circumstances that led to that near meltdown in September 2008, and an explanation of why they were not apparent until the last moment.  Misunderstanding Financial Crises: Why We Don’t See Them Coming (Oxford University Press), by Gary Gorton, of Yale University’s School of Management, mentions hardly any of the firms involved in the 2008 smash-up; it spends little time explaining the overnight repurchase agreements that were at the center of the bank funding crisis (his earlier book, Slapped By the Invisible Hand: The Panic of 2007, did that).

My bet is that it will happen again because Dodd-Frank isn't strong enough and leaves too much discretion ot the regulators. 

(via Thoma)