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The Obama administration, emboldened by the passage of comprehensive health-care reform, has turned its full attention to overhauling the financial services industry.

It was two years ago that the failure of Wall Street giant Bear Stearns set in motion a chain of events, which roiled the global economy.

As with health care, financial reform is a Gordian knot beset with many challenges. While a recent Pew poll suggests that a majority of Americans would like to see tighter regulation of financial institutions, the devil, as always, is in the details.

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Key issues include creating an agency to protect consumers, increasing the transparency of the derivatives market, and deciding how much authority to give regulators over companies deemed too large to fail. Bipartisan support is far from assured.

There is cautious optimism that a compromise can be found, though some worry that the end result will not prevent future calamities.

As Ambrose Bierce once wrote, reform is “a thing that mostly satisfies reformers as opposed to reformation.”

Fortunately, for readers interested in learning more about this subject, there has been a bull market for books on the crisis on Wall Street. A few of these books have been highlighted below. All are available to cardholders of the Newport Beach Public Library.

Kate Kelly, a Wall Street Journal reporter, goes behind the scenes to report on the collapse of Bear Stearns. “Street Fighters” is her riveting account of the final 72 hours of this once-proud firm.

In “13 Bankers,” economists Simon Johnson and James Kwak take aim at the consolidation of the banking industry as a root cause of the recent crisis. Critical of both deregulation efforts and government bailouts, the authors favor restructuring the industry into entities that are “small enough to fail.”

New York Times reporter Andrew Ross Sorkin reconstructs the events of September 2008 involving Lehman Brothers, AIG and Merrill Lynch, and the desperate attempts to prevent their failure. In “Too Big to Fail,” Sorkin faults the greed, ego and irresponsibility of individuals within a culture that encouraged excessive risk-taking but resisted efforts at regulation.

Michael Lewis, in “The Big Short,” explains how a handful of financiers made billions by buying insurance policies, known as credit default swaps, against bad sub-prime loans that had been repackaged as investment-grade real estate securities. The author focuses on the few who foresaw the collapse of this market to explain the forces that sent the world’s economy’s into a downward spiral.

In “Freefall,” Joseph Stiglitz, a Nobel laureate in economics, blames the depth of the recession on the prevailing philosophy of deregulation, which made possible the excesses of the banking industry; an incompetent and perhaps collusive Federal Reserve; and the inadequate intervention by the Obama administration. The author believes that restoring the balance of power between government and the markets is essential to fixing the system.

Celebrate National Library Week, from Sunday to Saturday, with a visit to the Newport Beach Public Library. Visit www.newportbeach library.org for a complete schedule of special events for children, teens and adults and discover why “Communities Thrive @ the Library.”


CHECK IT OUT is written by the staff of the Newport Beach Public Library. All titles may be reserved from home or office computers by accessing the catalog at www.newportbeachlibrary.org. For more information on the Central Library or any of the branches, please contact the Newport Beach Public Library at (949) 717-3800, option 2.

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