This, from Kevin Drum, seems fundamentally correct:
As for the cost of all this, we might as well suck it up. We’re way beyond the point of thinking we’ll get out of this mess without spending a trainload of taxpayer dough one way or another. This debacle is going to cost us hundreds of billions of dollars no matter what we do.And when it’s over, guess what? Pretty much all the same people will be in charge. A few senior executives will be out of jobs, but that’s about it. And the ones who replace them won’t be much different. The fact is that these people did what they did not because they’re stupid, but because the system practically begged them to act the way they did. That’s what’s broken, and fixing it depends mostly on what kind of new financial regulations we put in place going forward. I guess we’re still in firefighting mode and don’t have time to address that right at the moment, but I’d sure like to start hearing more about it sometime soon. In the long run, figuring out an effective way to regulate leverage, wherever and however it appears, is probably a lot more important than deciding which bureaucratic solution we should use to clean up the corpses currently littering the battlefield.