The Financial Crisis Inquiry Commission asked the Fed’s Bernanke to recommend some readings:
By Gary Gorton
Gary Gorton identifies the analogies between what happened to the shadow banking system and classic bank runs — 19th-century-style bank runs. Bernanke thinks that work is very interesting.
Deciphering the Liquidity and Credit Crunch 2007–2008
By Markus Brunnermeier
Brunnermeier at Princeton looks at the dynamics of a panic in the repo market and how that cycle of increasing haircuts in margin worked. And he and others have also done some work in trying to identify systemically critical firms by looking at their financial characteristics. There is some interesting work under way in this area.
Lords of Finance: The Bankers Who Broke the World
By Liaquat Ahamed
Upon reading the Pulitzer-winning book about the Great Depression, Bernanke told the commission, one can’t help but ask: “Doesn’t this seem awfully familiar?”
Liaquat Ahamed’s Lords of Finance is supposed to be a history book about the economics of World War I and the Great Depression. But there is terrific prescience to be found in its portrait of times past. Mr. Ahamed, an investment manager who proves to be a writer of great verve and erudition, easily connects the dots between the economic crises that rocked the world during the years his book covers and the fiscal emergencies that beset us today. He does this winningly enough to make his book about an international monetary horror story seem like a labor of love.
