A Banking Book “To Save Us All”
Skyrocketing up the Amazon charts to a high of #57 on the strength of a Michael Lewis review in Bloomberg View is The End of Alchemy: Money, Banking, and the Future of the Global Economy, Mervyn King (Norton).
King, a former governor of the Bank of England, offers a plan to create transparency and stability in high stakes banking, the kind that lead to the crash of 2008.
Lewis (Flash Boys) writes under the headline “The Book That Will Save Banking From Itself” says if King’s book “gets the attention it deserves, it might just save the world.”
King’s plan is to:
“Separate the boring bits of banking (providing a safe place to deposit money, facilitating payments) from the exciting ones (trading) … the riskier assets from which banks stand most to gain (and lose) would then be vetted by the central bank, in advance of any crisis, to determine what it would be willing to lend against them in a pinch if posted as collateral.”
This process would determine if a bank were solvent or not and prevent it from betting with taxpayer money rather than its own.
Showing strong circulation on low ordering at libraries we checked, The End of Alchemy has the potential to take off like Thomas Piketty’s Capital in the Twenty-First Century, (Harvard/Belknap Press, 3/12/14) as readers have proven their interest in serious books on very serious subjects.
Reading Lewis’s review offers a reminder of why his own nonfiction is so readable. He shares a telling anecdote about King, who was his professor at the London School of Economics:
“I’d been working at the London office of Salomon Brothers for maybe six months when one of my bosses came to me with a big eye roll and said, ‘We have this academic who wants to sit in with a salesman for a day: Can we stick him with you?’ And in walked Professor King … He took the seat next to me and the spare phone that allowed him to listen in on my sales calls. After an hour or so, he put down the phone. ‘So, Michael, how much are they paying you to do this?’ he asked, or something like it. When I told him, he said something like, ‘This really should be against the law.’”