Mouse

I can't believe there are still people insisting that a rescue of 'too big to fail' banks & AIG prevented a collapse of the whole economy. The collateral damage from their demise would have been incredibly minor if there was any political will to contain it properly. The reluctance to let bad banks fail was all about politics and not about logistics. The failure would have been a blessed purge of these tumors, and would have affected the narrow sliver of society that owns shares in these banks and little else.

The very narrow usefulness of these banks to the economy is proven by what we see in the aftermath of the bailout- boom times for the narrow Wall St. financial sector, and a continuing depression everywhere else. These banks do not carry the economy on their backs- we carry them!

Other lending institutions ( that played within the rules ) could have instantly filled in the market share of these zombie banks, because banks *produce nothing*. It's just digits on computer screens.

Availability of credit to the general public could have been rapidly restored in the wake of the failure of these overgrown casino banks. It would be the simplest task in the world for the Treasury to spread new money all around the country to all healthy remaining banks. Couple of clicks of the mouse and you're done. If the Fed balks, shut them down, too.