The credit-ratings agencies, which like to claim First Amendment protections, come in for a justified bruising of their own. When they appear in Tett’s narrative, they are hapless and essentially corrupt. Which is only fair: Standard & Poor’s, Moody’s, and Fitch were linchpins in the whole mess. Without the agencies sprinkling holy water on those ungodly securities, they wouldn’t have existed. Tett points out that the banks “constantly threatened to boycott the agencies if they failed to produce the wished-for ratings.” Needless to say, they got them.

The final third of the book alone is worth the price of admission, if only as a crib sheet for the events of the last two years. Tett does the best job I’ve seen of reconstructing the drama of the meltdown. Reading through it is a useful reminder of how close we came to an utter cataclysm. After the Bush administration disastrously let Lehman Brothers fail, it had the sense to prop up AIG and get into the bailout business, however clumsily. Tett quotes one senior banker in London, speaking before it was clear what steps the administration would take: “If this continues, the next logical step is that the cash eventually stops coming out of the ATM machines—if that happens, God help us all.”

How perilously close to the abyss we were! Now the question is how will we keep from returning there. In her concluding pages, Tett dips into her training as a social anthropologist and recommends that bankers and regulators take a “holistic” approach to measuring risk and preventing it from getting it out of hand. That, however, is a nebulous catchword. Here is something more concrete: No more off-balance-sheet entities. No more securities so complex top bankers can’t understand them. No more “too big to fail.” No more unlimited leverage and fake capital ratios. And if you take away a single principle from this book, let it be this one: when lending, bankers must have their own skin in the game.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at