Bank Bust

By now, many books have been published on the 2008 Financial Crisis that engulfed almost the entire civilized world. Nobel Laureate Paul Krugman has written about it in "The Return of Depression Economics". Gillian Tett's "Fool's Gold" is another, and Alex Brummer's "The Crunch" is yet another. First published in 2008 and updated in 2009, "The 'Crunch" focuses on the failure of Northern Rock and the crisis that it precipitated for the British financial system. This British-centric focus is different from the many books already written on the financial crisis of 2008, which are more centred on Wall Street and the US. And if this is missing from your mental history of this most momentous event up till now of the 21st century, then you can read it up here. This book does go into details on the people whose actions unwittingly caused the near meltdown of the financial situation in Britain, and this is not referring just to Adam Applegarth, the rogue CEO of Northern Rock who single-handedly almost brought Britain's financial system to its knees. Of course the problem really originated in the US through the uncontrolled sub-prime lending by banks and the subsequent investments in these toxic assets the world over.

This book takes a look into the triumvirate of the Bank of England, the Financial Services Authority and the  Treasury. An invention of Gordon Brown, then Chancellor of the Exchequer, it worked well enough in regulating and managing the financial flows and investments in Britain, which was centred on London. Indeed London succeeded in becoming a major financial centre in the world. While this worked well in good times, it failed to hold up when crisis hit. During the meltdown, these 3 parties descended into a finger-pointing stance, impeding the institution of necessary policies and actions quickly to overcome the run on Northern Rock and shoring up the rest of the banking system. This book makes for fascinating reading, and the chapter on the Central Bankers, which relates the life of key people such as Mervyn King, Governor of the Bank of England,  Ben Bernanke of the Federal Reserve, Jean-Claude Trichet of the European Central Bank, and how each approached the financial crisis makes for absorbing reading.

In the end, hindsight is always perfect, and Brummer concludes the narrative by deconstructing the whole episode from various angles to draw 'painful lesson' from it. A good read.