Reddit reviews The Courage to Act: A Memoir of a Crisis and Its Aftermath

Why Nations Fail by Daron Acemoglu and James Robinson

I, pencil by Leonard Read

Courage to Act by Ben Bernanke

Also not an economist, but I hold this issue near and dear. I've read quite a bit in the last year on the topic. I'm also looking to fix that "not an economist thing" too. Applications going out this month for grad school...

Sounds like you'd be interested in reading Ben Bernanke's book. Other than perhaps the president, Bernanke was the most important individual who influenced the aftermath of 2008. Your writing alludes to a knowledge of TARP (the 800 billion congressional bailout) -- Bernanke's Quantitative Easing amounted to 1.5 trillion in the same time frame as TARP and to 4.5 trillion when you consider everything that was done through 2012.

For a well reasoned take on that program, you can hear from the man himself. during a 2018 retrospective on the crisis.

Anyway. Most of what I'm about to say I've pieced together from the above two sources and some conversations I've had with actual economists.

1. The reason we bailed the banks out was because we had to. It is accurate, to the extent that we can know anything about a reality that didn't occur, to say that the combination of TARP and Quantitative Easing prevented a great depression. This really isn't up for debate.
   
   
2. The reason we bailed the banks out, rather than the people, is because the decision making ability of our legislative body is wrapped up in politics. Which is a total shit show. As we all know.
   
   We're lucky we got 800 billion in TARP funds. The real number, in all honesty, should have been a significant multiple larger and it probably should have gone directly to individuals rather than banks. I'm going to sound like an angry old man - but congress needed to get its head out of its ass, and it didn't.
   
   Bernanke described the tools he had available to him (monetary policy) as akin to trying to fix the economy with some twine and string. The preferred method of addressing economic problems among central bankers is, funnily enough, fiscal policy. It's more targeted -- you can write a bill to fit any situation you need. The Fed had to rely on ancient depression era statute to do anything extraordinary at all (article 13 of some dusty law I think) and even then, they had their hands tied.
   
   Remember... No action = depression.
   
   Had it been up to him, Bernanke would have gone directly to the people. I linked it already but at some point in the retrospective a fed higher up talks about how "man I wish we had the permission to purchase something other than just securities. Other central banks can. Why not us?" The reason they're lamenting this is because they didn't have the option to purchase mortgages in 2008. You'll find evidence of this position in Bernanke's book.
   
   Instead, we had a congress that was wrapped up in the emotion of the event and a Fed that did the best it could. Anger over the exec salaries, as you say. Nevermind that those bonuses were put in place before the bailouts, or that failing companies (paradoxically) have to pay more for their higher ups (since the failure of the company would reflect poorly on that CEO's career; they demand higher compensation to compensate for that risk), or that as a % of the company's yearly expenditures the CEO salaries were just a drop in the bucket.
   
   That's not to say that there wasn't reason to be angry. There was. And LOTS of it. I'm just saying maybe our top legislative authority should have involved itself in seeking solutions rather than getting involved in the media circus around the event?
   
   I wouldn't put this at the feet of Obama either. Presidents get all the attention for anything that happens under their watch, but the true power lies with Congress.

I can recommend quite a few. I wrote the FAQ on the "Causes of the Crisis" in the sidebar: https://www.reddit.com/r/Economics/wiki/faq_financial_crisis

There are so many books about this topic. I will list a few that I have personally bought:

Books that look at the "big picture"

• Alan Blinder - When the Music Stopped (Academic economist)
  
  
• Mervyn King - The end of Alchemy (Formerly BoE head)
  
  
• Anat Admati- The Bankers' New Clothes (Academic Economist)
  
  Books that are a "blow by blow" accounnt:
  
  
• Ben Bernanke - The Courage to Act (Former head of US Fed)
  
  
• Timothy Geithner - Stress Tests (Former Obama Treasury Sec.)
  
  
• Hank Paulson - On the Brink (Former Bush Treasury Sec.)
  
  This small list only begins to scratch the surface of the voluminous literature that exists on this topic. It's a good start.
  
  All of these books are accessible to laypeople.

The Courage to Act

HERESY

I like The Economist for keeping up to date on Economic news but if you want a really interesting book about the Fed during the Financial Crisis I would highly suggest reading Ben Bernanke’s book The Courage to Act.