I start the new year with a book review. I’ve been reading this book for a while. I only finished it over the holidays. It’s The Bankers by Martin Meyer. I became a fan of Mr. Meyer’s after I read his book The Greatest Ever Bank Robbery (review in previous post).
The Bankers offers an insider’s view of the banking industry. It’s not a textbook. Mr. Meyer drew a picture of the banking industry through stories and quotes from people in the industry. The quotes and stories are much more interesting than dry texts. The book starts with the nature of money and its role in a society. It then explains in details how banks perform their various functions — holding money, processing payments, lending money, and trading money. I especially like the chapters on payment processing and derivatives trading. The story on the journey of a personal check is fascinating. So are the stories on the history and the evolution of credit cards, the connected web of ATM switch networks, the invention of cash management brokerage accounts, derivative trading gone awry, and so on.
If you are interested in learning inside knowledge about banking and you don’t mind reading a long book, this is a good one. I sure learned a lot from it. For example before I read this book I didn’t know that the Federal Reserve is intimately involved in processing checks and electronic fund transfers, with thousands of employees working in these low-level operations. I thought it’s just a policy making and regulatory body. I also learned that the systems for payments between banks are extremely efficient. The average transaction size on the Clearing House Inter-Bank Payments System (CHIPS) is $6 million a pop. The cost? 18 cents to the payer and 18 cents to the payee. Compare that to moving $200 from my credit card to Best Buy. It costs Best Buy $4.
Because this is an older book (published in 1997), you can probably find it in your local library. If you want to buy one, used copies are sold on Amazon for less than $5 including shipping.
Rating: **** (good, you will learn something).
Refinance Your Mortgage
Mortgage rates hit new lows. I saw rates as low as 3.25% for 30-year fixed, 2.625% for 15-year fixed, with no points and low closing cost. Check mortgage rates in your state.