Taxpayers and the many smaller banks that pay into the F.D.I.C.  fund that insures bank deposits were those most likely to be assigned responsibility for the bailout costs, Ms. Bair writes.  Needless to say, these people had no seats at the rescue tables

Ms. Bair and the F.D.I.C. were repeatedly shot down when urging regulators to replace a flailing bank’s management or require that a rescue operation force an institution to make fresh loans with the money it received.  When the F.D.I.C. staff suggested barring Citigroup from paying bonuses to executives if the government took losses on assets it had guaranteed, other regulators refused to go along.

Henry M. Paulson Jr., the Treasury secretary, summoned Ms. Bair to his office.  No reason was given for the meeting.  When she arrived, Ben Bernanke, the Federal Reserve chairman, was already there.  Timothy Geithner, then the president of the New York Fed, was on the phone.  Handed a piece of paper, Ms. Bair saw that she had been ambushed.  It was a script, prepared for her by the Treasury and the Fed, stating that the F.D.I.C. was moving to guarantee all the liabilities in the financial system. Astonishingly, the guarantee would cover all bank depositors and even protect unsecured claims against institutions. In short, the F.D.I.C. was being asked to back “everybody against everything in the $13 trillion banking system," Ms. Bair writes.

Dumbfounded, she told the men she had to discuss the plan with the F.D.I.C. board. Over a few days, they came up with a better, less costly plan.  If she had gone along, Ms. Bair said in an interview last week, "everyone who held bank debt would have immediately gotten a windfall profit," as their bonds and other bank securities rose in value on the F.D.I.C. backing.  "Of course, I wasn’t going to do that," she adds, "and we ended up with a program that only guaranteed the renewal of expiring debt, which is where the problem was. And we charged a fee."

The other disturbing theme in Ms. Bair’s book involves favored treatment given to Citibank and its parent by top regulators. Even as the bank racked up billions in losses on its mortgage and derivatives businesses in 2007 and 2008, Ms. Bair writes, no meaningful supervisory measures were taken against Citi by either the Office of the Comptroller of the Currency or the New York Fed, its main regulators.  "A smaller bank with those types of problems would have been subject to a supervisory order to take immediate corrective action, and it would have been put on the troubled bank list," Ms. Bair writes.  "Instead the O.C.C. and the New York Fed stood by as that sick bank continued to pay major dividends and pretended that it was healthy."

"Our bailout strategies didn’t clean out bad mortgage assets, and we didn’t force banks to take losses," she says.  "We imposed no accountability and did no fundamental restructuring.  We were Japan, and I think we have a Japan-like recovery because of it."