Customer Reviews

A Piece of the Action: How the Middle Class Joined the Money Class

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If you work in personal finance or want to know how the business came to be, I highly recommend this book. It has one instance after another of "a-ha" moments where the light goes on in your head as to why things in our industry are the way they are. Nocera does a great job of tracing each of the innovations that made Wall Street more and more accessible to the average American, benefiting the investor and the companies that got financing.

The other very instructive point this book makes is about the mind, and methodology of the people who drive innovations. For anyone looking to build the better mousetrap, here is a book about person after person who did exactly that in the arena of personal finance.

Highly recommended.

What a thriller! Nocera describes the way Am. attitudes toward debt, investment, savings, and inflation have been transformed since 1958 (the day 60,000 credit cards got mail-dropped in Fresno). Every chapter revealed another fascinating aspect of our changing relationship to $: Credit cards, money market funds, the discount brokerage boom and Charles Schwab's relationship to that force, the superstart fund managers and the personal stories of Peter Lynch and Fidelity, as well as the second wave of credit card design, which focused on poaching upon those most prone to run up debt. This book can give you a deeper understanding of your own attitudes toward finance, while also offering many insights into America's ambivalent relationship toward the dollar and debt.

Mr. Nocera has done a phenomonal job of putting the entire evolution of consumer financial products into an easy-to-read story. I would recommend this book to anyone who is interested in the development of products such as mutual funds, credit cards, and discount brokerage accounts.

Anybody who wants to understand the world of finance has to read this book. Nocera has maintained a very high level of narrative power throughout this amazing book. The description of the events that led to the famous stock-market crash of 1987 is fantastic. That, in my opinion, is the most fascinating chapter of the entire book. Those who were not following the US stockmarkets at that time will find it very exciting to get an "action replay" of the events of those days. As I read the book, I could not help but draw parallels with the thriller "Moneychangers" written by Arthur Hailey. Well, Nocera is the better of the two! But then, we have to keep in mind that Hailey was at a definite disadvantage -- he was writing fiction...

"A Piece of the Action" describes the mass-market revolution in personal finance. The story starts with the first credit cards and continues through the development of mutual funds, discount brokerage houses, and money market accounts. Along the way you will meet characters such as Peter Lynch, Dee Hock, and my personal favorite, Andrew Kahr. None of the products these people developed were available prior to 1960. The book offers no tips and it may not help you manage your own personal fianances, but by understanding the history of mass-market personal finance, you may be better prepared for the future.

A child born today will accept the Internet, iPods, cell phones, and digital cameras as easily as we accepted television in the 1950's. It is in this spirit that you should view this book. There was a time not so long ago when people traveled, they carried cash to pay their hotel bill, for there were no credit cards. They ate in diners because McDonald's and Burger King did not exist. Very few people called long distance because it was prohibitively expensive.


That was life before the financial revolution that began in the 1950's, and Joseph Nocera in this wonderfully written biography of the revolution takes us through it step by step. There were two huge steps in the MONEY REVOLUTION. They were the CREDIT CARD and the MUTUAL FUND.


The two steps would transform the middle class into the money class and nothing would ever be the same. Where we came from and how we got here is the subject of this book, and it is told better than it is told anywhere else.
It is a story that begins with a notion, that notion is that banks are snobs who only want to deal with big corporations, that they look down on the middle class. There would come a time when that notion would be challenged by one man and one bank.


A.P. Giannini, the founder of the Bank of Italy that in the 1940's would become Bank of America turned banking on its head. California had statewide banking which means that a bank in California could open branches anywhere in the state. Only California permitted this. In New York you were limited to cities. In places like Texas you were restricted even more to towns and villages only.


Giannini wanted to service the middle class and that's what he did. After his death, Bank of America would create the credit card, and call it BankAmericard. Years later we would all know as VISA. The first unsolicited credit card drop took place in 1958 in Fresno, California. Over 60,000 credit cards were mailed to consumers in Fresno at one time. As they say the rest was history. This is what you learn in this book:


* How Charlie Merrill would create Merrill Lynch to cater to the middle class, and go on to dominate the brokerage industry for generations.


* How Dee Hock the creator of VISA should be honored as perhaps the most innovative inventor in the credit card industry.


* How Ned Johnson by attaching check cashing writing privileges to Fidelity account unleashed the creation of company that would gather 1 trillion dollars under its belt.


* How Andrew Karh created the non-bank bank that allowed him to circumvent every financial regulation in the country.


* How Peter Lynch created a mutual fund that would gather $100 billion in investable assets under its wings.


* How Charles Schwab challenged the entire brokerage industry by offering massive discounts.


* How John Reed would revolutionize banking by created the ATM, and everyone thought he was crazy. Reed would go on to take Citibank to the top of the credit card world.



CONCLUSION:


Joseph Nocera tells us that the banks did not create the financial revolution. We the consumers created it, by demanding it. As the financial institutions one by one fell line to give consumers their wishes, we demanded more and more. For the first time, you will understand the underpinnings of the revolution, and in knowing the beginning, you will be in a better position to see where we are going.


If you love a good read, and a fascinating story read A Piece of the Action, and thank you for reading this review.


Richard C. Stoyeck

I reviewed this book for the Lexington Herald Leader when it was first published and have purchased over 200 copies for friends, clients and employees over the years. If you don't just want to understand personal finance but understand American socialogy in general, this is the book to read.

Don McNay don@mcnay.com

I bought this on an Amazon recommendation. Its really a great book. I am truly shocked this book is not better known; I'd rate it a classic on Personal Finance.

I often refer to this thoroughly readable book, 15 years out and its still fresh, more so after the financial services meltdown. When it first came out, the Pres. of the mondo consumer bank where I worked at the time was recommending it to all the senior managers. It is both a great primer for how we got into the current credit mess, and a good read with lots of fine, nuanced stories.

The chapter (no spoiler here) about a Schwab VP, in Hong Kong to sort out an over-leveraged speculator after the Black Friday crash, is as riveting as any gangster novel. Read this book if you want to understand the foundations of the financial house of cards that just collapsed out from under us, or if you have any interest in the financial services biz in general. Come to think of it, we all do now.

In the late 60's and mainly the 1970's, a huge sea change took place in American financial history - a change so dramatic that it is still being felt today. Joseph Nocera takes a look at those dramatic changes an the figures behind them in A Piece of the Action. The book presents the story of how Americans financial future shifted from mostly employers to the individual and how government action trailed and, in some cases, badly lagged the fast moving financial landscape of the 70's.

The book reads well with each chapter a coming across as a somewhat tale of the many tales that occurred in tandem during the financial revolution that swept the country from the late 60's through the early 80's. It starts with The Drop, the great credit card drop in a quite California town where credit cards became a household item overnight and the kinks were worked out of a product that has become ubiquitous. Incredible changes occurred any man far flung enterprises which all had finance as a common denominator. Stories like the the emergence of Charles Schwab and Merrill Lynch and the rise of mutual funds. The sweeping away of Regulation Q and the inability for banks to pay going rates of interest by way of the competitive money market funds that came about and the push by individuals to get into them.

The book offers an accurate representation of the events that took place that gave individuals much more control over their financial future. The book is upbeat and treats all these events as being good for the average American. I cannot disagree that having more choices is a bad thing, but if the choices presented to people is accompanied by some sort of education about what the choices really mean, then what value are they? That was a problem then and continues to be a problem now. The financial industry has grown tremendously as a result of all these changes outlined in the book. In so doing, they have create a huge array of financial products that supposedly allow the individual to live well in their retirement years, but will they? Half of most folks retirement funds were wiped out in 2008. Am I missing something?

Nevertheless, the story that is told here is a good read from a historical as well as a storytelling perspective. It's a book that you will want to finish and that will likely leave you with a better perspective of how this all came about.


Reviewed by L.A. Little for Technical Analysis Today (tatoday) on 7/30/2009