Simon Johnson speaks the obvious.

Finally, Paulson really needs you to believe that once the crisis broke, he did what was necessary to save the world’s financial system. As Mrs. Thatcher liked to say, “there is no alternative.” This part of the story has been told much better by Andrew Ross Sorkin in Too Big To Fail. But the great conceit in Paulson’s book is still fascinating. He wants to convince you that the only way to save the American financial system and—by implication—the world’s economy was by keeping Wall Street essentially intact. To be sure, he says that “the Wall Street I knew had come to an end.” But what he means is that the remaining investment banks—including Goldman Sachs—became bank holding companies and therefore, for the first time in history, acquired effective government backing. 

So leading financial institutions were saved, which is not by itself an unusual event in some countries. It happens with some regularity in places with serious governance issues and endemic corruption. But even in troubled middle-income countries, such as South Korea, Turkey, Argentina, or even Russia, it is extraordinary to keep management in place when providing such support. Perhaps a few financial executives might be deemed beyond reproach and unfortunate victims of a system-wide panic. But to keep them all, with their base pay and their bonuses and their pensions? That is essentially unheard of. Perhaps there is a poor and benighted country somewhere that saved its massively incompetent financial firms in this manner, but you can search the historical records long and hard for a parallel to what Paulson pulled off. [Emphasis added]

The fallacy here is complete. Since the entire system failed—in terms of the largest banks and quasi-banks—Paulson and his supporters, including his successor at Treasury, argued that we must treat everyone generously in order to have an economic recovery. But the United States always presses for a much harder approach toward failed bankers in other countries. And with good reason: when the whole system crashes due to reckless risk-taking, you should aim to re-boot with a different incentive structure and, immediately, with much more effective regulation.

Johnson was the Chief Economist at the IMF.

The stunning thing is, despite going through one of the greatest financial crisis in the history of the country, nothing has really changed.