Earlier quoted context omitted.
Because there was a systemic risks. You let one bank collapse, OK. If the collapse causes other banks to collapse then it's bad. When WalMart, Costco can't transfer money to fill shelves, people go hungry. When people can't get their wages, they go hungry.
Then, at least be fair and nationalize the big banks. There's no point pretending that the large banks are "private" if they are subjected to some special rules. People put their money there willingly, no one forced them to. Let them all feel the joys of "free market capitalism".
That would be a good idea. If bank is too big to FDIC to absorb and "too big to fail" and it fails it becomes Treasury owned overnight.
For example Paul Krugman agrees. https://www.nytimes.com/2009/02/23/opinion/23krugman.html
>What Alan Greenspan, the former Federal Reserve chairman, and a staunch defender of free markets, actually said was, “It may be necessary to temporarily nationalize some banks in order to facilitate a swift and orderly restructuring.” I agree.
>The case for nationalization rests on three observations.
>First, some major banks are dangerously close to the edge in fact, they would have failed already if investors didn’t expect the government to rescue them if necessary.
>Second, banks must be rescued. The collapse of Lehman Brothers almost destroyed the world financial system, and we can’t risk letting much bigger institutions like Citigroup or Bank of America implode.
>Third, while banks must be rescued, the U.S. government can’t afford, fiscally or politically, to bestow huge gifts on bank shareholders.
... >Still, isn’t nationalization un-American? No, it’s as American as apple pie.