You do not throw good money after bad. These banks made piss poor management decisions about whom they would give credit to, and many consumers made piss poor credit decisions.
Yet the millions of us that did not cause this problem are expected to pay for it? Screw that!! Were does it end.
I will tell you where...SOCIALISM and the destruction of capitalism. These banks should fail, just as the Detroit auto industry should if they can not stay in business and be profitable with out my tax dollars bailing them out.
In my opinion, what we are now seen as a long overdue global market correction. The only thing these bailouts are going to do is delay the inevitable and in the long run it will be worse.
I am not an economist. But I know right from wrong, and you do not reward mistakes by paying those that made them.
I've also read numerous articles lately by economists that state the bailout was not necessary. You won't see the mainstream media interviewing them... I wonder why that is.
There are ways to have completed a re-capitalization without a bail-out. But it would not have changed the fact that the credit markets needed re-capitalization, they had been bled just about white. It really had become a question of when do we pay, and how much do we pay. If we pay through the federal reserve, banking operations can continue. If we pay with a direct loan from the Treasury, later the cost would be higher. Finally, if the banks fail we would have to pay their creditors (you and me by the way) through FDIC, or if the money still isn't paid we get global armageddon, everything will only have the value it has right this moment, which is usually little indeed.
A Bagehot principle plan may have worked early on, but we didn't act quickly enough.
The government has made loans to the banks lots of times in our country's history for this reason, this is right around the thirteenth stock, real estate, housing cycle we have gone through, it's nothing new.
For reference, the first case of an investor/bank speculation bailout occured in the 1600's when the government of Britian stepped in and made loans to banks that lost investments in a bubble. It is a normal part of capitalism, really. Think about it, bankers in communist dicatatorships are demonized as enemies of the proletariat, the capital is siezed and the bankers are shot.
At the end, we (all of us) are the reckless borrowers, I can't pay for my house tommorrow, most of us can't. In other words I have leveraged the wealth I generate to purchase something I otherwise couldn't. I have savings deposits in the bank that holds my mortage. They use that credit to make loans, using leverage, to people like me to buy a house, most of us have a savings account at a bank of some sort, we are all the reckless lenders.