

TOO BIG TO FAIL: Paul Giamatti playing Ben Bernanke. ( Macall B. Polay )

Then things would get worse.

And then: “Okay, let’s do that.”

This held through the federally midwifed and taxpayer-supported sale of Bear Stearns to J.P. Morgan, through the Federal Reserve’s rescue of AIG, through the idea that taxpayers would buy up these toxic assets and sell them later, and, finally, through to the final plan: giant heaps of public money funneled directly into private megabanks, all of which were forced to accept the funds.

No one liked it. Not Hank Paulson or Timothy Geithner or Ben Bernanke. Not the Congress that initially refused to pass the bailout nor some of the healthier banks that had to accept it. It just seemed, to the people in the middle of the crisis, like the only thing that would work.

And, somewhat amazingly, given the haste with which the policy was constructed and the uncharted circumstances in which it was implemented, it did work. Sort of. It worked to arrest the financial crisis, though it didn’t come anywhere close to preventing a recession (that said, economists Mark Zandi and Alan Blinder estimate (pdf) that the recession would’ve been much worse without it).

But that meant that the collapse Paulson and Bernanke and Geithner were facing, the emergency that made unthinkable and unfair and unprecedented and perhaps unlawful policies necessary, didn’t happen. And so Americans saw the policies but only briefly heard about the nightmare that brought them into being. And then they felt the aftershocks and then — and this shouldn’t be underestimated — saw the bonuses that meant the financial system had been “saved” and reacted with all the horror and hatred that TARP and the banks and the whole damn thing so richly deserved.

Which is why “Too Big to Fail” is very much worth your time. The financial crisis wasn’t that long ago, but even so, it’s hard to recall how insane that period was, how the economy’s guardrails shook and then bent and then broke and how we almost tipped over. But it’s worth remembering, if only because it’s the only possible explanation for why we did what we did, and why we are where we are.