Paul Krugman is critical of Tim Geithner's new book Stress Test on a couple of points. Geithner was not a fan of fiscal stimulus which he called "sugar". Instead of fiscal stimulus, the US and Europe got a dose of fiscal austerity. This was supposed to stimulate the economy by restoring business confidence. Geithner also argued that government programs to reduce the debt burden of underwater home owners would not stimulate growth. Krugman provides some evidence which contradicts Geithner's belief. The data indicate that homeowner relief would have provided an order of magnitude stimulus to economic growth compared to the estimate made by Geithner. Krugman concludes that the failure to use fiscal stimulus, and homeowner relief programs, kept the economy in recession much longer than necessary.
Sheila Bair, a Republican, was the head of the Federal Deposit Insurance Corporation (FDIC) during this period. She wrote Bull By The Horns as her account of the government's response to the financial crisis. She was highly critical of Geithner's role. She argues that his priority was to save Wall Street, and that he had less concern about saving Main Street. The HARP program, designed by Geithner and Larry Summers, was a publicity stunt according to Bair. It did little to reverse household deleveraging which was raising havoc on Main Street. She was also critical of Geithner's role as Secretary of The Treasury. Several of the bank regulating agencies reported to Geithner. According to Bair, the regulators did whatever they could to block initiatives the the FDIC proposed to limit household deleveraging. They also opposed Bair's recommendations to raise the capital requirements for US and European banks at international meetings on bank regulation and capital requirements.
The above link is to an interview of Sheila Bair about her book. It provides a good summary of the book. Stress Test and Bull By The Horns. Provide two insider interpretations of the US response to the financial crisis.
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