In 2003, well before most analysts looking at the housing industry were talking about a housing bubble, Danielle DiMartino Booth was writing about precisely that topic for the Dallas Morning News. A few years later, while still working for the newspaper, she received a call from Richard Fisher, then president of the Federal Reserve Bank of Dallas. That initial contact ultimately led to a job offer at the bank in 2006 because, in Fisher’s words, “The Fed needed writers who could translate economic research into readable prose.” DiMartino Booth would spend nearly a decade at the Fed’s Dallas bank observing the financial crisis and advising Fisher regarding the Fed’s response to it.

DiMartino Booth primarily draws on her experience working at the bank in composing Fed Up, a book that is at times a blistering critique of the Fed, as is obvious from its subtitle: An Insider’s Take on Why the Federal Reserve Is Bad for America.

Black hats, white hats / DiMartino Booth can be found sporting a black cowboy hat in the book’s promotional materials. The imagery is apropos because of how she classifies nearly every person or group she profiles in her book: she casts them either as having flawed methods and powers of analysis (black hats) or as being reality-based and accurate (white hats).

For example, members of the Fed’s Federal Open Market Committee get black hats: “They returned to their lofty perches, some at the Eccles Building, others to the executive floors of Federal Reserve District Bank buildings, safely cushioned from the decision they had just made. … They would feel no pain in their ivory towers.” DiMartino Booth’s condescending Ph.D. colleagues in Dallas also get black hats: “I didn’t have a Ph.D. As far as they were concerned, I had nothing interesting or valuable to say…. Few had even the slightest interest in financial markets. Nor in talking to me because of my lack of academic accomplishments.” Janet Yellen gets a black hat: “Tiny colorless Janet Yellen”; “Top corporate leaders in Yellen’s district thought she was a clueless academic more interested in labor issues than the dilemmas of those running businesses.”

On the other hand, Dick Fisher gets a big white hat: “Unlike the majority of those seated around the massive oval table, he’d been in the trenches as a manager of a hedge fund (Wall Street) and as a diplomat involved in negotiating NAFTA (government), and had been retained by the world’s biggest player for strategic advice (private enterprise).” The Federal Reserve District Bank management also gets a collective white hat: “All twelve District Banks have a board of directors elected from their regions. Unlike members of the Board of Governors, they are not isolated from their constituents.” Zoltan Pozsar, an analyst focused on “shadow banking,” is another white hat: “Like me, Pozsar was a finance major and non-Ph.D. His work vividly reveals how an outsider sometimes sees things more clearly than those inside a system.”

Some of DiMartino Booth’s criticisms are well-founded, including her descriptions of the detached nature of many of the Fed’s academic economists. She also highlights the fact that the Fed has largely bought off the economics profession, snuffing out most potential dissent. At the Fed, “the percentage of professional economists had grown exponentially.… The Federal Reserve is the single largest employer of Ph.D. economists in the nation, and presumably the world. … They dare not bite the hand that feeds.”

Additionally, she highlights the lack of diversity in the Federal Reserve System, not just in the sense of hiring women and minorities for senior management positions, but in the sense of background: “[Now-retired Dallas Fed research director Harvey] Rosenblum approached hiring by looking for variety in schools of economic thought and vintage, or the era candidates received their doctorate. Vintages tend to ossify…. Every five years you have to make sure you are bringing in new ideas. Diversity does matter.”

Forecasting a housing bubble? / A debilitating flaw of the book is that, although the critiques of the methodology for the Fed economists’ predictions are often on point, the book is light on describing a cogent methodology that DiMartino Booth herself uses when forecasting the economy or market activity. To take just one example, there is the case of her writing on the housing bubble. Given her harsh assessments, I would have expected her to explain some type of clear, underlying system to discern that a bubble was rising and also to apply that methodology when offering other forecasts.

Hoping to find that methodology, I looked up the article she cited to back her claim that “I first forecasted a housing bubble in a story that ran in the Dallas Morning News on January 2, 2003.” That column was similar to the Wall Street Journal’s “Heard on the Street” format, with a columnist in an ear-to-the-ground role giving market insights and commentary. As for her supposed forecast, she merely surveyed four industry analysts, one of whom was David Tice, a persistent bear on market forecasting. Tice said, “There’s definitely a housing bubble.” I don’t understand how quoting someone else who was bearish on housing back in 2003 amounts to DiMartino Booth forecasting the housing bubble. If this exemplary column is an indicator, she probably quoted hundreds of analysts in a similar way over the course of her years working at the Dallas Morning News. Which ones were right and which were wrong? And of those who were right, did she agree with them and why? The book does not address those basic questions.

This question of methodology carries through the entirety of Fed Up. At one point she dismisses the work of her economist colleagues at the Dallas Fed by saying, “I never learned anything from them that the markets hadn’t already told me.” Her so-called “market” methodology as detailed throughout the book has as its starting point various intense conversations she has with the “tremendous network of colleagues who are now friends in New York.” She refers to this input as “collective market intelligence” and “many prisms.” Apparently, after this information is assimilated and combined with what she hears on CNBC (her favorite cable network, which she mentions throughout the book), it is then fed into some type of “black box” where it is blended with her internal feelings about the future state of the economy. Maybe she did think there was a housing bubble brewing in 2003, but was she just lucky or did she really have some clear method that she could point to for thinking that way? Is her approach any more reliable over the long run than the academic economists that she criticizes?

Unclear philosophy / It is also difficult to say what DiMartino Booth’s underlying economic or political philosophy is. She repeats the tired trope of a deregulation bogeyman combined with greed in the lead-up to the crisis: “Greenspan championed the era of financial deregulation that drove Wall Street to levels of greed that surprised even the most hardened investment banking veterans.” She is certainly not a free market advocate: “I listened to [Milton] Friedman’s full-throated defense of free-market capitalism. Loved the guy, but it was also true that unfettered, unregulated free markets can lead to disasters.” Her arguments for what caused the financial crisis are also difficult to classify, as they do not contain much in the way of substantive philosophy or analysis: “Shadow banking is what caused the financial crisis.”

There are not many new revelations about the financial crisis in Fed Up. Most of the descriptions of the failures and bailouts of Bear Stearns, AIG, and other institutions just repeat the standard narrative of the crisis that the world would have come to an end if the Treasury, the New York Fed, and the Federal Deposit Insurance Corporation had not intervened. A perusal of the endnotes for Fed Up reveals a concentration of source materials in articles from the Wall Street Journal, Bloomberg, and the New York Times, and not much original research for the book. Finally, DiMartino Booth provides the reader with a great deal of color regarding the personal details of her life as the financial crisis unfolded, which I found unnecessary.

As a skeptic of many of the policies and statements that came out of the Federal Reserve System over the past decade and as a supporter of transparency measures such as “Audit the Fed,” I am open to well-documented critiques of the institution. Sadly, Fed Up does not meet that standard.