Simon Johnson, the former chief economist at the International Monetary Fund, is the co-author of “13 Bankers.”

Tami Chappell/ReutersTreasury Secretary Timothy F. Geitner. in a speech in Atlanta this week, said, “The U.S. banking system today is less concentrated than that of any other major country.”

In a major speech earlier this week to the American Bankers Association’s international monetary conference, Treasury Secretary Timothy F. Geithner laid out his view of what went wrong in the financial sector before 2008, how the crisis was handled 2008-10 and what is needed to reform the system. As chairman of the Financial Stability Oversight Council and the only senior member of President Obama’s original economic team remaining in place, Mr. Geithner’s influence with regard to the banking system is second to none.

Unfortunately, Mr. Geithner’s speech contained three major mistakes: his history is completely wrong, his logic is deeply flawed, and his interpretation of the Dodd-Frank reforms does not mesh with the legal facts regarding how the failure of a global megabank could be handled. Together, these mistakes suggest that one of our most powerful policy makers is headed very much in the wrong direction.

On history, Mr. Geithner places significant blame for the pre-2008 excesses on Britain and other countries that pursued light-touch regulation. This is reasonable – though surely he is aware that the United States has led the way in lightening the touch of regulation, at least since 1980. A senior British official retorted immediately, “Clearly he wasn’t referring to derivatives regulation, because as far as I can recollect, there wasn’t any in America at the time.”

More broadly, Mr. Geithner seems to have forgotten how big banks were saved — by government intervention, at his urging. He should probably watch “Too Big to Fail,” now playing on HBO, or peruse the book by Andrew Ross Sorkin of The New York Times, on which it is based –- just look in the index for Geithner and trace the arguments that he made for repeated and unconditional bailouts of big banks and their creditors from mid-September 2008. (Mr. Sorkin’s book ends in fall 2008, while Mr. Geithner was still head of the Federal Reserve Bank of New York; for more on what happened after he became Treasury secretary, see my book with James Kwak, “13 Bankers.”)

On logic, Mr. Geithner’s thinking includes a major non sequitur, as he continues to deny that the size of our largest banks poses a problem. “Some argue that the U.S. financial system is too concentrated, which could promote systemic risks,” he said. “But the U.S. banking system today is less concentrated than that of any other major country.”

But big banks in almost all other major countries have run into serious trouble, including those in Britain and Switzerland — where policy makers are now open about the potential scope of further disasters. French and German banks made large amounts of reckless loans to peripheral Europe and have strongly resisted higher capital requirements, helping to create the current potential for contagion throughout the euro zone (and explaining why the Europeans are so keen to keep control of the International Monetary Fund). The Japanese banking system has been in terrible shape for two decades.

Lawrence H. Summers, Mr. Geithner’s former mentor, likes to point out that big banks in Canada were not in serious trouble during the global recession. But whatever your view of whether Canada has good regulation or was mostly lucky –- and put me in the skeptical camp, after my recent talks with their senior officials –- the simple point is that big banks in Canada are actually small in comparison with American and other global banks. The largest five Canadian banks have a combined head count roughly equal to that of Citigroup (just under 300,000 people) and even the biggest of them has only about one-third the assets of JPMorgan Chase.

Mr. Geithner’s thinking on bank size is completely flawed. The lesson should be: big banks have gotten themselves into trouble almost everywhere; banks in the United States are very big and have an incentive to become even bigger; one or more of these banks will reach the brink of failure soon.

Mr. Geithner’s most serious mistake is to believe that we can handle the failure of a global megabank within the Dodd-Frank framework. He argues that expanded powers for the Federal Deposit Insurance Corporation mean that banks can be allowed to fund themselves with more debt relative to equity than would otherwise be the case, because the F.D.I.C. can supposedly impose losses on creditors in the “resolution” situation, in which it takes control of a troubled bank. Because the bank could actually default on its loans, management and lenders will be more careful.

“But given the other protections here, including our resolution authority, we do not need to impose on top of that requirement any of the three other proposed forms of additional capital,” he said in the speech. (The italics are mine.)

I’ve talked repeatedly with senior officials in the United States and other countries about the resolution authority, and I’ve also discussed the issue directly with some of the top legal minds on Wall Street, people who work closely with big banks. Mr. Geithner’s interpretation is simply wrong. (Disclosure: I’m a member of the F.D.I.C.’s newly established Systemic Resolution Advisory Committee, an unpaid group of 18 experts that meets for the first time on June 21, but my assessment here is purely personal.)

There is no cross-border resolution mechanism or other framework that will handle the failure of a bank like Citigroup, JPMorgan Chase or Goldman Sachs in an orderly manner. The only techniques available are those used by Mr. Geithner and his colleagues in September 2008 –- a mad scramble to find buyers for assets, backed by Federal Reserve and other government guarantees for creditors.

The right conclusion for Mr. Geithner should be: huge cross-border financial operations are immune from orderly resolution; such companies should therefore be run on a completely segmented basis, with separate capital requirements and no recourse to parent companies.

Consequently, capital requirements should be much higher than currently proposed by any official, for capital is the buffer that stands between bad management decisions and taxpayer bailouts when bank resolution is not possible. Real estate trusts that are not too big to fail routinely finance their assets with 30 percent equity and 70 percent debt. In a volatile world, this makes complete sense. We should move all our big banks, as well as the rest of our financial system, in that direction.

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