John Gapper, of Britain's financial Times, nails it. He discusses its subsidized level of leverage a bit too briefly, but his overall conclusion is sound:
"Not only is it reasonable to suspect that Goldman, which has entwined itself with governments around the world by sending partners out into "public service" when they leave, would not be allowed to fail by its alumnae network, but the bail-out was prima facie evidence.
Thus, at the heart of the financial system, now sits a professionals-only, high-risk Wall Street firm with its own private equity and hedge funds arrayed on top of a nonpareil corporate and government client list, which taxpayers reasonably assume is gambling with their money.
You do not have to be a vampire squid-style conspiracy theorist to see the difficulty...."
The bailout was to save the rich and powerful from their terrible investment/ speculation decision consequences.
$10.6 trillion in securitized assets led to some $60 trillion in CDO & other 'products', sold to investors with a small cut to the financial intermediaries. An internal financial-industry speculative inflation.
All the Big Banks should have gone into bankruptcy, with the bonuses for speculating being eliminated, and most finance folk fired.
The House construction industry lost over 500 000 workers, because of overbuilding. The Finance industry was also overbuilt on 'product'.
Bush blew it, and Reps blew it, and Obama continues to blow it.
No real production company with a business plan would have failed to get debt capital, even if all the big banks went bust.
I remember watching our former Sec. of the Treasury marching in with his 2 1/2 page bailout plan and his promise that the world would come to an end if Congress didn't pass it immediately.
It also did not elude me that this was a very rare instance of seeing the fox caught with his plants down, inside the hen house with the chickens looking him right in the eye.
I am still amazed that this guy did not resign, but what do I know.
As far as allowing the banks to go bankrupt, don't worry, we will have another chance to do that between 6 and 18 months from now.