Most people in the financial sector do not think Goldman, MS, or JPM would have failed without the bailout. Lehman and Bear Stearns did fail, but their failure was largely handled within the banking system itself (a lot of Lehman being bought by Barclays and Bear Stearns being absorbed by JPM).
And how many of those people benefited directly from the bailouts? The idea that banks can't be allowed to fail is the fundamental fallacy that has underpinned the last five years. Of course they will argue that they "needed" their noses in the public trough.
not sure what you're advocating...in the Great Depression banks failed, the depositors lost all their savings, triggering runs on other banks, etc., hence the name Great Depression. so that wasn't a very sound policy.
on the other hand a government backstop for a bunch of traders making giant risky bets with depositors' money so heads they win, tails we lose, is not a sound policy either.
somewhere there's a reasonable medium, collectively safeguard the payments system and bank deposits, without giving banks carte blanche to use depositors' money and government backup to make risky bets.
and don't let banks get so big that it's both an administrative nightmare to shut one down, and they have enough political power to thwart shutdowns and effective regulation.
I'd say the policy should be: reinstate glass-steigal on steroids. If and when banks fail, blow out the management and have unlimited FDIC insurance backstopped by the Fed. No need to apply discipline on the liability side of banking because it hurts main street. If the investment banks fail ( not commercial banks ) let them die. Whatever damage that causes to the macro economy, make up for it by providing stimulus projects/tax cuts as needed. Lets stop privatizing profits and socializing losses. BTW, you are right GS and JPM would have gone under if not for the bail outs. They were experiencing a classic bank run and not enough liquidity to support. A great opportunity to clean up wall street was missed. Instead the country was looted at the expense of main street and they got away with it. That is how it will look 100 years from now.
We will never know the truth. The CEO of every financial institution swears up and down about the strength of their company right up until the moment it goes bankrupt. Look at Jon Corzine and MF Global...
It's the smaller banks that struggled the most and continue to do so: http://articles.latimes.com/2012/jul/06/business/la-fi-banks...