Forum split ?

i think they could have been allowed to fail, but there were good and bad ways to do that. the standard bankruptcy fire sale would have had a lot of unfortunate side-effects, and would have made it a lot more expensive to compensate the savers.

it's better to keep the savings accounts with the good loans, to force bondholders to wait for the risker loan book to be wound down slowly before they might get paid, and to let just the worst bits go to the wall (and the ordinary shareholders to get nothing).

that is of course similar to what was done to NR and B&B. the government was able to control the process there because it was injecting lots of cash. to do the same thing without injecting cash would presumably have required emergency legislation.