Those are not qualities that most Americans these days associate with men or women administering the work of the federal government. They were not qualities that, for many years, loomed large or necessary in choosing the board of the Federal Deposit Insurance Corporation.

The FDIC was created in 1933 in the wake of the banking collapse in the Great Depression. Its purpose was clear: to insure prompt payment in full for small deposits at failed banks. Combined with authority to examine thousands of banks, confidence in a shattered financial system could then be restored.

That was, and remains, an important purpose. For a while, however, the FDIC did not seem needed. The experience of the Depression induced bankers to be ultra-cautious. During and after World War II, the resurgent economy meant clear weather for banks. For decades, there were practically no bank failures, and the FDIC receded into a kind of bureaucratic backwater. It was not really challenged or influential in policy. When questions of regulatory practice arose, it was the Treasury or the Federal Reserve that held sway.

My first contact with the FDIC in 1963 perfectly reflected both the institutional hierarchy and the absence of challenge. The FDIC had just built a new building placed across 17th Street from the White House. Despite the location and the fine architecture, the opening was not a major Washington event. As a junior Treasury official, I was delegated to represent the department at the dedication ceremony. The speaker was the chairman of the House Banking Committee, one Wright Patman, a man engrained in the strong populist traditions of rural Texas. His theme was clear. There simply were not enough bank failures. The creative instincts of small business were stifled by conservative loan policies. The FDIC was simply doing its job too well.

Chairman Patman had long since left from Washington when his wish was amply fulfilled. A young Bill Isaac was appointed a FDIC board member in 1978, a year or so before the institution had to deal with the potential failure of a large (by the standards of 1970s) Philadelphia bank. The decision was made, with the Federal Reserve in the lead, to provide enough emergency assistance to keep the bank running. Bill Isaac was prescient in his concern that the approach could lead to a policy that some banks were simply “too big to fail.”

Soon, Bill became chairman. It wasn’t long before he and his agency were thrust into a decade-long succession of really serious threats to the stability of our depository institutions and to the U.S. economy. It started with the savings bank and agricultural bank crises, soon followed by the Latin American debt crisis, embroiling the largest international banks. The debacle of the deregulated savings and loan industry followed. One of the largest commercial banks—Continental Illinois—was rescued by the combined efforts of the FDIC and the Federal Reserve. There was a string of bank failures, and near failures, toward the end of the 1980s. The FDIC, along with the Federal Savings and Loan Insurance Corporation, the Federal Reserve, and the United States Treasury were together faced with unique challenges.

Senseless Panic is in part the story of that decade—the actions taken and the lessons learned and the lessons forgotten. The face of banking in the United States changed, with reverberations lasting to this day.

I was the chairman of the Federal Reserve in those days. Like my predecessors, I thought “the Fed” had a special role and broad responsibility for defending and maintaining financial stability. Truth be told, given the pattern over decades, we tended to look to the FDIC as a sort of junior partner. That, I think is fair to say, was not Bill Isaac’s view—not when it came to failing banks.

My first impression of Bill was of a rather brash young man, certainly vigorous and self-assured, but perhaps lacking the seasoning that one might expect of an agency head. He was certainly not deferential. But as we got into the trenches together, I came to realize the importance of his character, of the personal strength desperately needed in perilous times.

Given all of that, there can be no surprise that Bill Isaac has strong views about the official response to the latest and most serious financial crisis. He sets out his view of the way ahead. There is no mincing of words. Senseless Panic is a clarion call to action by Congress, by the regulatory agencies, by accounting standards setters, by rating agencies, and by banks themselves.

I and others might challenge one or another of the specifics or relative priorities. But there can be no question that his sense of urgency is justified and his proposed policies need a thoughtful response.

There is another lesson to be drawn from this book. It concerns an issue never explicitly stated, but relevant and timely when there is such distrust of government and those who serve it.

Bill Isaac was a public servant. In a real sense, he still is, even if not now in formal office. What he demonstrated is that, by force of character and innate ability, he could arouse a rather forgotten old-line government agency into an active vital force, able to respond to crises with vigor and effectiveness.

Fortunately, that spirit remains in the leadership and staff of the FDIC today. It is dealing effectively with matters of momentous importance.

Bill’s book amply reflects the sense of frustration, the exceptional demands emotionally and professionally placed on top officials and staff alike at times of crisis, the rigidity of bureaucracy, and the limitations on resources that are the lot of public servants. But what comes through it all is something else. It is the sense of pride, of having been tested to the maximum, of serving not a personal or a private interest but the American public.

Those are qualities that somehow we as a nation have been losing—not entirely, and I trust not permanently. Of one thing I am sure. We should not and cannot settle for less than a fair share of our country’s best talent when manning the ramparts of governments. That is one key lesson of Bill Isaac’s life story, a lesson at least as important as the reality of the banking crisis.

Special thanks to my wife, Christine, who encouraged me to battle against the TARP legislation and to write this book. She gave me unwavering support throughout the long hours I have devoted to this book and public policy issues over the past two years.

I wrote this book to get the truth out about what happened and why and how we can prevent future crises. We—and I mean all of us and our great country—are in enormous trouble! If we do not take the time to learn what went wrong and how to fix it, we and our children and their children will pay a very big price.

If we let them, our political leaders will do everything in their power to hide their culpability for the mess in which our nation finds itself, and they will enact politically easy legislation that will not address the fundamental causes of the crisis and will, in fact, make things worse. Our leaders are already covering up their role in creating what I call the Senseless Panic of 2008, are trying to deflect blame to “greedy bankers,” and are offering slogans rather than solutions.

Among other things, they are telling us the Troubled Asset Relief Program (TARP) was essential to calming the markets when, in fact, the TARP did far more harm than good. This book exposes the TARP for what it was—an ill-conceived program hastily slapped together by a panicked government working too close for my comfort with a handful of Wall Street firms. It set off an economic and political firestorm from which we have yet to recover.

Little did I know when I took the post that the country was about to experience the worst economic and banking crisis since the Great Depression—a crisis that would result in larger and more severe bank failures than in the 1930s.

Inflation had been high throughout the 1970s and it was getting worse. President Carter appointed Paul Volcker as chairman of the Federal Reserve in 1979 with the charge of getting inflation under control. Volcker raised interest rates rapidly and the prime rate soared to an incredible 21.5 percent. Few financial institutions or borrowers could absorb that kind of rate increase.

Following Ronald Reagan’s election in 1980, I was named chairman of the FDIC. The entire banking and thrift sector was in dire straits. A short recession occurred in 1980, followed by a deep and prolonged recession in 1981-1982, with unemployment soaring to almost 11 percent.

From 1980 through 1991, some 3,000 banks and thrifts failed, including many of the largest in the country (nine of the 10 largest Texas banks, for example). The failed banks and thrifts had $650 billion of assets and cost the FDIC fund more than $100 billion (multiply those numbers by six to put them into relative terms to today’s banking system).

It was an extremely difficult period, but the public ’s confidence in the banking system held and financial panic was averted. Even as we handled thousands of bank and thrift failures, the economy improved and we enjoyed the longest peacetime economic expansion in history.

Contrast this result in the 1980s with the worldwide financial panic that hit in the fall of 2008 and threatened to push the world into an economic depression. The economy was actually quite strong in pre-financial crisis 2007, unlike 1980-1982, so why did we experience such different outcomes in the financial markets?

It is impossible to listen to or read a news report about the crisis of 2008 and beyond without being told that the problems in this latest crisis are much worse than in any period since the Great Depression of the 1930s. When people do talk about the 1980s, most refer only to the S&L crisis and seem not to be aware how serious the banking and economic problems were during that period.

Most people—members of Congress included—would be surprised to learn that we were so concerned about the condition of our major banks during the 1980s that we developed a contingency plan to nationalize all of them. As late as the presidential debate of 1992, candidate Ross Perot asserted that the FDIC fund was horribly inadequate to cope with what he believed was the massive insolvency of our major banks.

Having lived 24/7 with the banking and S&L crises of the 1980s, I examine the lessons we learned and failed to learn from that period and identify the mistakes that led to the Senseless Panic of 2008. It was a panic that would not have happened had our political leaders acquired even passing knowledge of what happened during the 1980s and how we dealt with the enormous problems.

Many historians believe that World War II was a continuation of World War I. They believe that the issues that led to the first war were not resolved and the Treaty of Versailles was terribly flawed, so after a 20-year hiatus, the fight was resumed.

Similarly, I believe the banking and S&L crises of the 1980s were misunderstood by our political leaders, the wrong fixes were put into place during the 1990s, and those actions led us directly into the banking crisis of 2008.

Based on what I have seen thus far from the Obama Administration and the legislative efforts on Capitol Hill, we have not gotten any smarter this time around and I fear for the future of our great nation.