Warren Buffett wrote an interesting op ed piece in the New York Times last week thanking Uncle Sam for the bailout. In it he points out the dire consequences we were in back in 2008 and while acknowledging that the government missed the numerous warning signs leading up to the crisis he gives the government and the leaders who orchestrated the bailout high marks.

Not only was the editorial interesting but the responses to it have been as well. Much of it questions Buffett’s sanity if not his motives. They point out that Buffett’s investments, particularly in GE, benefited from the TARP. One suggests what Buffett would say under the influence of truth serum.

I liked the piece if for no other reason than it stressed the seriousness of the situation the economy was in. During the recent election there was criticism that financial reform was heavy handed and our future Speaker of the House compared financial reform to killing an ant with a nuclear weapon. The problem with a catastrophe averted is that once it is averted, people like to say what was the big deal? 

First off I give Buffett credit for pointing out the seriousness of the crisis, but little else. We had pointed out the seriousness of the situation more than a year before the Lehman flashpoint. One only needs to look at the numerous actions by the Federal Reserve as far back as 2007 in addressing the bank solvency issue. They took actions not done since the Great Depression to try and correct the problem so no one should suggest there was not a major problem. But any honest examination of the issue has to start in the summer of 2007 not the fall of 2008 and has to point out the months of denial. The big question remains was the actions taken correct and why was the risk allowed to build up prior to the flashpoint? 

And critics are correct in objecting to the fawning over Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke, both of whom reassured us that what was happening would not happen just months before it did. Paulson’s relationship and communications with the major financial players on Wall Street during this crisis still has not been appropriately examined. We pointed out before that if their analysis of what was needed were correct, then the first appropriate response from them should have been to offer their resignations.

The bottom line is that the financial crisis in all of its forms running up to the September 2008 flashpoint is a big deal. It represents a huge failure of policy.

Thanking the government for the bailout is akin to thanking someone for driving you to the hospital in the car they ran you over with. We are not even sure if they took the best rout.