No bullets were fired and no generals marched into the Oval Office to take charge of the American state, but the transfer of power during last year’s financial crisis was as dramatic and fundamental as in any military overthrow. Wall Street used financial rather than military might to subjugate the American people. You think I’m exaggerating? Well, if you are in any doubt about what really happened during the financial turmoil of September/October 2008, I urge you to read Chapters 13-20 of Andrew Ross Sorkin’s account of the greatest financial crisis in modern times and how it was resolved in favour of a new financial aristocracy.

Sorkin is no radical leftist, but a business journalist with the New York Times who specialises in mergers and acquisitions. He actually likes and respects bankers. His account is all the more persuasive for being exhaustively objective in a way only American journalists seem to know how to be these days.

He spent a year taping 500 hours of interviews with more than 200 individuals who were involved in the financial crisis – chief executives of the big banks, board members, management teams, US government officials, junior managers.

He secured contemporaneous notes, calendars, call logs, expense accounts. Under freedom of information he even got the official daily diary of the US Treasury Secretary, Henry Paulson. He also got hold of a copy of the biggest cheque ever written – for $9 billion – drafted in desperation to save the US mega-bank Morgan Stanley.

A criticism might be that he lets the detail get in the way of the big picture. Behind the sources is a telling account of how a handful of financial executives succeeded in ­­­ translating a financial crisis of their own making into a crisis for the US people and for the world.

Paulson and the bankers presented the American Congress with a choice: either put up $700bn dollars to rescue the banks or plunge the world into catastrophe, depression and possible war. It was, as one banker put it, “an economic 9/11”.

It was nothing less than the biggest ransom note in history. No Bond villain has ever been so bold as these banking megalomaniacs.

This fabulous sum of public money was necessary to buy up the bad debts, the “toxic assets”, run up by the banks during the biggest asset bubble in history. The bail out was called TARP – Troubled Asset Relief Programme – as if the dud loans and dodgy mortgages of the banks were to be regarded as a humanitarian cause deserving of public support. In fact it was a bill for systemic irresponsibility and financial misbehaviour which should have landed its perpetrators in court, rather than in the money.

Reading this book it is impossible other than to see that the banking crisis of 2008 had been caused by the single-minded pursuit of personal gain by a financial elite who gave no thought to the implications of what they were doing to the wider economy and society. They knew even before the crash that it couldn’t go on – the leverage, the dodgy derivatives and mortgage-backed securities – but they weren’t going to stop while they were making huge amounts of money. As Chuck Prince of Citigroup put it: “As long as the music is playing, you’ve just got to get up and dance.”

When the bill for the party fell due, Congress was initially furious. Democrats railed against the greed and incompetence of the banking establishment. Republicans called TARP an act of “socialism” that would destroy the capitalist system.

The American people took to the streets demanding the biggest bank raid in history be stopped. This was a moment when the political establishment could have stood its ground, nationalised the banks and demanded the resignations of the boards. That was what Roosevelt did in the 1930s. But faced with the sheer financial power of Wall Street, Congress blinked first.

This book offers vivid images from the crisis – you can almost smell the funk in the boardrooms as huge financial institutions struggled to survive.

Sorkin has a verbatim account of the conversation between Paulson and two of his aides about how they should tell Congress that even $500bn might not be enough to rescue bankrupt banks.

“What about $1 trillion,” Kashkari said.

“We’ll get killed,” Paulson said grimly.

“No way,” Fromer said, incredulous at the sum. “Not going to happen. Impossible.”

“Okay,” Kashkari said. “How about $700bn?”

“I don’t know”, Fromer said. “That’s better than $1trillion.”

It’s hard not to see this as the biggest sting in history. Paulson quite explicitly saw TARP as a means of preventing most of Wall Street from going the way of the huge investment bank Lehman Brothers, into chapter 11 bankruptcy protection. Lehman was clearly singled out as a fall guy, though curiously in Sorkin’s account, Paulson blames Alistair Darling, the British Chancellor, for blocking a deal whereby Barclays would rescue Lehman Brothers.

If I were Darling, I would consider ringing my lawyers. It’s clear that Lehman, and its unprepossessing CEO Dick “the gorilla” Fuld, was allowed to go under in order to demonstrate to Congress what would happen if the banks as a whole were left to the disciplines of the free market.

Forget capitalism – an entirely new economic system has been created by the reverse takeover of the state by finance – a kind of socialism for the banks.

Sorkin concludes with a warning that risk and ego is back in Wall Street – especially in the bank that has made the most out of the rescue: Goldman Sachs, Henry Paulson’s former employer. Bankers always suspected that they were too big to fail, and that when it came to the crunch, the government would bail them out. Now they know.

Too Big To Fail: Inside The Battle To Save Wall Street by Andrew Ross Sorkin (Allen Lane, £14.99)