The Committee to Save the Banks (Hank Paulson, Ben Bernanke and Tim Geithner) is out with a new book defending their mismanagement of the Great Financial Crisis.  The book, Firefighting, is yet another attempt to explain why the crisis response they lead wasn’t a complete disaster and why preventing this type of response in the future is a bad idea.

Of course, it is very difficult to defend the indefensible.  And ultimately, the Committee fails to do so.  This is particularly true when the Committee looks at the damage to the real economy from the crisis and their policy response:

Millions of Americans lost their jobs, their businesses, their savings and their homes. The popular anger generated by the crisis and by longer-term trends of increasing inequality, insecurity, and social immobility has roiled our politics and our society.

Consider for a moment in 2007, Bloomberg featured an article on me in which I publicly said all of this damage was avoidable.  Boston Magazine followed up with an article on me titled The Man Who Would Save the Economy.

Think about that for a moment!

My focus was and still is on saving the economy.  Compare and contrast that with the focus of the Committee to Save the Banks.

All of the damages the Committee says the financial crisis caused were the direct result of a choice by these individuals to save the banks and banker bonuses rather than save the real economy.  Saying the financial crisis caused these damages is just another futile effort to shift the blame from themselves.

Regular readers know our financial system is designed to protect the real economy.  It even comes with a financial crisis playbook to guide Treasury Secretaries and Fed officials in how to respond to end a financial crisis and minimize the damage to the real economy (this playbook is so well known, it was used successfully by Sweden to end its 1990s financial crisis and by Iceland to end its 2008/2009 financial crisis).

The Committee chose to throw away the playbook.  While they were at it, the Committee members unilaterally decided to tear up the social contract and undermine capitalism.

It is shocking how much damage these arsonists have caused.