Irwin also explains what happened when Congress was drafting the new regulatory regime that has become known as the Dodd-Frank Act. Chris Dodd, then a Democratic senator from Connecticut, initially tried to curtail the Fed’s power. At the same time, Rep. Ron Paul started a movement called Audit the Fed, which was an effort to make the institution’s inner workings more transparent. Although this was at a time when both Bernanke and the Fed were massively unpopular, the Fed mobilized its supporters, and in the end, nothing changed. Irwin reports that even Goldman Sachs CEO Lloyd Blankfein made a call to Sen. Bob Corker, a Republican from Tennessee, pushing for Bernanke’s confirmation to a second term. “What allowed this deeply unpopular agency to emerge from the crisis scratched and bruised but, if anything, more powerful than it had been before?” Irwin asks. “Its tentacles turned out to be so tightly wrapped around American business and politics — large and small, national and local — that it was almost impossible to kill,” he answers.
There are also some lovely touches. Irwin recounts how a 2011 celebration, held at the Alte Oper, Frankfurt’s historic opera house, to mark Trichet’s retirement, devolved into an argument among European leaders. As “Trichet and Merkel and Sarkozy hammered at each other in their back room, no resolution to be found, the notes of Mendelssohn’s finale echoed through the building, the music as jolly as the outlook for Europe was looking dismal.” Earlier, in 2007, at the annual meeting of central bankers at Wyoming’s Jackson Lake Lodge, a local rancher who was supposed to demonstrate the effects of horse whispering by getting a mare to submit to a saddle couldn’t perform. “The parallels with the financial crisis then just starting to unfold were so obvious that a murmur went through the crowd: Central bankers were whispering to the financial markets, trying to calm them. But just as in the show, soothing words might not be enough.”