In 2008, America experienced the biggest meltdown of its financial sector since the Great Depression.

The conventional wisdom is that this failure in subsequent government rescue, commonly known as the bailout,

was brought about by three decades of bank deregulation.

There were a lot of causes for the meltdown, but deregulation wasn't one of them.

Ironically, it wasn't because the banks had become unmoored from government control that led them into the financial storm.

It was because they had become too closely tied to governments.

For three decades, Uncle Sam, like an enabling parent, had always been there when the big banks got into trouble.

The shock in 2008 was that for one brief moment, Uncle Sam wasn't there.

In the wee hours of September 15, 2008, Lehman Brothers filed for bankruptcy.

The financial industry waited for the feds to step in and save Lehman bondholders like it had saved those of bare sterns some months earlier.

That didn't happen.

Global financial markets seized up, as the Dow Jones industrial average fell 498 points or nearly 4.4%.

Financial institutions effectively went on strike.

Banks wouldn't lend money to other banks, and thus indirectly to the public, because they had no idea which financial institution might go belly up next.

The economy can withstand a stock market crash, but a credit market freeze, essentially a cash freeze, can cause a depression, as credit underpins almost all business and personal activities.

Indeed, some large companies, including General Electric, were so dependent on these short-term credit markets that they were in danger of not being able to pay their workers.

The financial industry pleaded with the government's act.

Later in the same day, September 15, it did.

The feds wouldn't save Lehman's, but it would save AIG, the primary insurer of mortgage loans.

A month later, the troubled asset relief program, TARP, a $700 billion plan to pump taxpayer cash into America's banks and financial institutions was approved by Congress.

Public officials generally agreed that the free market had failed.

In November 2008, President George W. Bush came to New York to explain why he, a Republican president, had signed TARP into law.

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