Reddit reviews After the Music Stopped: The Financial Crisis, the Response, and the Work Ahead

I'll defer to Alan Blinder on this one. The passage, which I have truncated considerably, is in Chapter 10 of the book. Here it is:

>"...There is a strong, though not necessarily accurate, belief that proprietary trading by commercial banks was among the root causes of the financial crisis. Was it? That’s a matter of definition. If we use the conventional definition of proprietary trading—actively buying and selling assets for the banks’ own accounts—there is relatively little evidence that proprietary trading got big commercial banks into the soup, and small banks never did much of it, anyway.

>"If, on the other hand, we classify as proprietary trading the fateful decisions to retain significant volumes of their own MBS and CDOs on their balance sheets (“eating their own cooking”), there is little doubt that proprietary trading led them down the primrose path.

>...Volcker had a point. (Doesn’t he always?) Not only is it patently unfair to ask taxpayers to cover a bank’s trading losses, but it also sets up terrible “heads I win, tails you lose” incentives...

>...But there are serious practical problems with the Volcker Rule. How can regulators distinguish, in concrete cases, between proprietary trading for the bank’s own account and market making on behalf of a client? (Answer: With great difficulty.) How can they tell hedging, of which society approves, from gambling, of which it may not? (Answer: Only by knowing the bank’s entire portfolio, if even then.)* If proprietary trading is chased out of heavily supervised commercial banks, where will it go? To less-well-supervised investment banks? To totally unsupervised hedge funds? Would that make the financial system safer? (Answer: It’s not obvious.) What if a giant nonbank investment house with a huge trading book was on the verge of failure? Should we follow the Lehman precedent and let it go under? (Answer: That doesn’t sound too appealing.)

>One major practical problem in designing regulatory restrictions on proprietary trading is how to distinguish between trading for the bank’s own account and trading for other purposes, such as market making or serving customers. Easy, you say. Just determine whose money is at risk—the bank’s or the customer’s. Well, that’s the right starting point, but it’s not quite enough.

>Consider this simple example: A bank, acting as a dealer, gets a customer order on Monday to buy $10 million worth of CDS on a CDO of subprime mortgages called BS-I. But it’s a thin market, so the bank doesn’t have a seller at the ready. To service its customer, the bank temporarily takes the other side of the trade itself: It sells the CDS to its customer, and maybe doesn’t find a real CDS seller until Thursday. Did that constitute market making for the customer? Well, I guess so. But for four days the bank held a short position in the CDS on BS-I; it was putting its own money at risk. For those four days, the trade looked and felt proprietary.

Not OP but I glanced over these books and will definitely read Floored, Boom and Bust Banking and, The Midas Paradox. If you have any more books you'd recommend, even if they aren't about the Fed, please share. OP may be interested in After the Music Stopped by Alan S. Blinder. While it's not explicitly about the Fed, there are several chapters dedicated to what the Fed did to help cause the crisis, what the Fed did to help solve it and, the Fed after the crisis. The best part is that you can skip the chapters you're not interested in and it will still make sense.

>theres plenty to hit Obama on, but "he never tried to help" is a bullshit neocon talking point.

Did I ever say that Obama never tried to help? Obama obviously tried to help, but too little, and too late. Funny how he started ''fighting'' for the poor after the Democrats had lost their majority?

Read a single book about the financial crisis. Obama fucked the working class over on ideological grounds, you know ''moral hazard'' and all. Not because he ''couldn't''. But given how your knowledge comes from a reddit post on r/politics, it doesn't surprise me you are this misinformed on the issue.

Read

https://www.amazon.com/Crisis-Wasted-Barack-Defining-Decisions/dp/1948122316

https://www.amazon.com/After-Music-Stopped-Financial-Response/dp/014312448X/ref=sr_1_1?keywords=When+the+music+stopped&qid=1570719446&s=books&sr=1-1

If you are actually interested in Obama's presidency.

Also why are you claiming that I ignored racism? I never did, but pretending like race was the pimary reason Hillary Clinton lost has to be the most fucking MSNBC retarded take I have ever seen in my life. Black voters did not come out for Hillary like they had for Obama in 2008, and with good reason. Democratic policies had been disastrous for black Americans, who are disproportionately poor thanks to slavery and systemic racism in our society.

But keep throwing those bull shit Hillary shill straw-men out there. Anyone who criticizes Obama or the Democrats is a racist who falls for neo-con propaganda. Roflmao.