Most historians of the United States are familiar with the 2008 financial crisis. An immense speculative bubble in the housing market—encouraged by both government and private lenders—collapsed, creating losses that threatened to bring down large parts of the world's financial system. Washington responded by putting over $700 billion into various financial institutions—a massive bailout that, however distasteful, contained the crisis. First Responders, edited by Ben Bernanke, Timothy Geithner, and Henry Paulson, does not challenge this narrative but presents a wealth of detail about it. The editors and many of the authors were officials who helped devise and execute policy during the crisis. They served in both the Bush and Obama administrations and sometimes differ over matters such as the effectiveness of the Obama administration's 2009 spending program and the proper role of the government in housing finance, but on the whole they offer a consistent and intriguing picture of events.

First Responders does not focus on the causes of the crisis, and those interested in that subject must look elsewhere. The authors do concur that the housing market spun out of control because of overly generous private and government financing and that investment bankers distributed securities based on home mortgages throughout the financial system, leaving much of it vulnerable to the collapse in housing prices, but these hardly constitute revelations. The editors and authors also agree that regulation failed, but here their point is more subtle. The evolution of financial institutions since the 1970s meant that large parts of the banking system faced little or no regulation. Many important institutions could not even borrow directly from the Federal Reserve. The problem, then, lay not so much in the adequacy of regulation where it existed but its extent.

This volume excels in describing the government's response to the crisis. Each of its eighteen chapters deals with a specific dimension of policy. One examines the Fed's activities as “lender of last resort,” another the rescue and restructuring of General Motors and Chrysler, and so on. The result can be a little repetitive, but this volume nevertheless contains a wealth of invaluable information. For instance, conventional central bank doctrine holds that these institutions should act as “lender of last resort” in a crisis, lending without limit against sound collateral to provide liquidity and thus prevent “runs” from taking down basically sound institutions. Changes in the financial system since the 1970s, however, meant that the Fed lacked the authority to make such loans to many important institutions such as investment banks. In very short order, the Fed cobbled together devices to make credit available throughout the financial system. Because the crisis originated in the U.S. housing market, most observers initially believed that it would largely confine itself to the United States. Unfortunately, institutions throughout the world held securities backed by mortgages on American homes, and in most cases they had borrowed dollars to purchase these instruments. In the fall of 2008, as the crisis spread throughout the world, the Fed loaned over $500 billion to other central banks through its “swap lines,” allowing them to provide banks in their countries with desperately needed dollars. Even fairly well-informed observers will find some new information scattered throughout the volume.

All of the authors of the volume's essays are “insiders”—many of them powerful officials at one time or another—but they represent both parties and hail from two administrations, so when they concur, as they do most of the time, their judgments demand attention. All believe that far too many financial institutions were undercapitalized in 2007, and they blame uneven regulations for much of the problem. They approve of how the 2010 Dodd-Frank Act extended regulation but regret that it banned many of the devices they used to contain the crisis. They point out that in most cases, the government recouped most of the immense sums it put into financial institutions, with interest—albeit after several years. With a few major exceptions, the losses fell on shareholders, not taxpayers. Accordingly, they deprecate the widespread characterization of policy as “bailouts.” The government's largest losses, by far, were in Fannie Mae and Freddie Mac, federally-chartered institutions that bought and sold mortgages and operated like private corporations but had an implicit government guarantee. Though the intensity of feeling varies, the authors concur that such institutions represent a poor model—the embodiment of “moral hazard.” Finally, the authors agree that government action prevented a second Great Depression; the 2008–2009 recession was bad but by no means the equivalent of the downturn of the 1930s.

All in all, First Responders constitutes a valuable addition to the literature on the 2007–2009 crisis, providing information not only on what federal authorities did but on the frantic atmosphere in which they operated.