Robert Reich has an excellent post on his blog asking the question on my mind, why don't we just let companies go bankrupt. Chapter 11 is there for a reason.
So why, exactly, is the Treasury substituting government bailouts for chapter 11? Even if you assume Wall Street's major banks and insurance giant AIG are so important to the national and global economy that they can't be allowed to fail, that doesn't mean they have to be bailed out. They could be reorganized under bankruptcy protection. True, their creditors, shareholders, and executives would take bigger hits than they're taking now that taxpayers are bailing them out. But they're the ones who took the risk. We didn't.
This all makes me very sad. This dog makes me laugh.