Like the Wizard of Oz, the Federal Reserve is shrouded inmystery and does its work in a big building and often operateswithout much transparency. Unlike the famed literary wizard, theFed has real power over people's lives.

That's why the public is better served by knowing more about howthe Fed works and how it does and doesn't do its job.

Former Fed executive and U.S. Central Federal Corporate CreditUnion President Jim Kudlinski has produced an engaging andenjoyable primer on the subject that will appeal to both expertsand general readers. The Tarnished Fed: Behind Closed Doors:Forty Years of Successes, Failures, Mystique and Humor is theliterary equivalent of a medical diagnostic examination.

Kudlinksi contends that one of the reasons that there needs tobe more transparency is because the Fed dropped the proverbial ballin the period leading up to the latest financial crisis. He isespecially critical of then-New York Federal Reserve PresidentTimothy Geithner and the staff at Fed headquarters.

“The entire mortgage-backed security mess right in his[Geithner's] backyard, better known as Wall Street, while heslumbered at his desk,” Kudlinski wrote. “Geithner and his bankwere the Fed's first line of defense in the subprime mess.”

But a few pages later Kudlinski, who worked at the Fed in the1970s and early 1980s,conceded that even if the Fed had discoveredthe problems earlier, it's not at all clear if anything would havebeen done in light of the nation's home buying frenzy.

He argues that “Congress and the Fed were not likely to takeaway from consumers their first opportunity at home ownership. Itwould have taken a serious problem for them to act. Butunfortunately, not the catastrophe that did occur.”

Talk about a perfect storm.

The author argues that the Fed's focus on its role as aregulator all too often results in it not doing enough supervisionof the financial institutions under its purview.

Kudlinksi was long gone from U.S. Central (he ran it from1981-1986) when it got into trouble by concentrating too much riskinto subprime mortgages. But he has strong feelings about theregulatory failures.

“The NCUA didn't step in early enough and there were manywarning signs that were ignored,” he said in an interview withCredit Union Times. “And the corporate credit unionexecutives relied too heavily on the ratings, and too many thingswere given high ratings.”

Although Kudlinski spends considerable time critiquing theFed-he thinks it has too many employees who don't do meaningfulwork and it takes too long to make decisions-a great deal of hisbook is a valuable primer on its structure and powers.

He doesn't spend much time on the Fed's political and policyroles during the financial crisis. Fortunately, readers interestedin that can read David Wessel's masterful book, In Fed WeTrust.

In writing The Tarnished Fed, Kudlinski has provided animportant service by demystifying an important governmentalentity.