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Selling Money: A YOUNG BANKER'S FIRST-HAND ACCOUNT OF THE RISE AND EXTRAORDINARY FALL OF THE GREAT INTERNATIONAL LENDING BOOM by S. C. Gwynne (Weidenfeld & Nicolson: $16.95; 182 pp.)

December 28, 1986|John M. Broder | Broder covers banking and international finance for The Times.

Third World countries owe commercial banks around the world about half a trillion dollars, an awe-inspiring sum that is unlikely ever to be repaid. How did the banks mess up so badly?

Los Angeles journalist and former banker S. C. Gwynne provides part of an answer in "Selling Money," which chronicles the international bank-lending frenzy of the 1970s and 1980s.

Gwynne's book is addressed to a lay audience unfamiliar with the language and logic of the brotherhood of international finance. It is a simple explanation of a complicated subject, perhaps oversimple in that it lays the bulk of the blame for the foreign-debt problem on the banks, who were but one of several foolish and guilty parties. The borrowing nations, with their grand spending schemes and their larcenous elites, bear a share of the responsibility, as do the governments of the developed nations who pressed the banks to overlend.

Despite that flaw, it is a well-written and useful volume, an accessible addition to the growing catalogue of literature on the most important and least understood economic dispute between the world's rich and poor countries.

The chief culprits in Gwynne's story are young, inexperienced loan officers like himself, and their supposedly flinty-eyed bosses, the chieftains of America's most prestigious banks, who hired them and entrusted them with their depositors' money.

Gwynne, the managing editor of California Business magazine, joined Cleveland Trust in 1977 and was quickly assigned to the fast-growing international division. Before his 26th birthday, with no foreign language ability and virtually no credit training, Gwynne had traveled to 25 countries and helped push $150 million out of the bank.

Gwynne's experience was duplicated by hundreds of other young loan officers like himself, all competing fiercely to lend billions to the least credit-worthy borrowers imaginable. The result was the foreign-debt crisis that began with Mexico's default in August, 1982, and will continue at least until the end of the century for both the foolhardy banks that made the loans and the impoverished countries that must struggle to repay them.

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