It's hard to remember in the midst of the bailout craze, but the United States does have legal mechanisms for dealing with insolvency. We have the FDIC system for banks and bankruptcy for everyone else just about. These are well-established institutions. There's a wealth of experience and caselaw about both. We know how they work, and both are reasonably transparent and fair. While they have some limitations, they have served the country well for years.
And yet there has been a marked resistance in both the Bush and Obama administrations to putting banks into FDIC receivership and non-banks into the Chapter. To be sure we had WaMu, Wachovia, and IndyMac cycled through the FDIC, and Lehman is wending its way through bankruptcy. But the list of companies we haven't required to go through the ringer is equally impressive: AIG, Citi, Bank of America, Bear Stearns, GM, Chrysler (and probably many of the financial institutions that took TARP funds).