In the annals of financial history, the year 2008 stands out like a tarantula on white bread. That was the year the banking industry faced its worst crisis since the Great Depression. Unprecedented rises in real-estate prices during the previous decade seduced bankers into making riskier and riskier mortgage loans. When the housing bubble burst, so did their mortgage portfolios. The banking behemoth Lehman Brothers went bankrupt. Others, such as Merrill Lynch and AIG, came within a hair’s breadth of failing as well until the federal government stepped in to rescue banks deemed “too big to fail.”

This was an enormous and potentially unpopular undertaking, and so Federal Reserve Chief Ben Bernanke appeared on the TV news show 60 Minutes to explain to the county why we needed to bail out the banking system. He did so by way of analogy. Imagine, he explained, that you have an irresponsible neighbor who smokes in bed and sets fire to his house. Should you call the fire department, or should you simply walk away and let him face the consequences of his actions? What if your house – indeed the houses in the entire neighborhood – are also made of wood? We all agree, he argued, that under those circumstances, we should focus on putting out the fire first. Then we can turn to the issues of assigning blame or punishment, rewriting the fire code, and putting fail-safes in place.