Happened here in the UK too. Northern Rock was in trouble but companies get in trouble all the time; what killed it and precipitated a full-blown financial crisis here was certain journalists revelling in the downfall of capitalism from the safety of their state-broadcaster sinecures...
Ordinary deposits with banks should be protected by the government because the general public cannot evaluate the risk of a bank collapsing. There's probably a case for some protection for companies that hold accounts -- although companies should really be aware that by depositing money in a bank, they become lenders to the bank, and they should have the skills to mitigate that risk. Perhaps smaller companies, and accounts specifically holding payroll, should receive greater deposit protection.
Which seems to translate, at least in my mind, to 'banks should be too big to fail, but only in the ways I like'.
It's not clear, under your scheme, how we would draw the line between companies that "should be aware" of the risks and how they would mitigate them? Do we have to have insurance policies against our bank deposits? But who pays for that?
Maybe I'm not reading with enough goodwill here though. Perhaps by "the government should protect" you mean to say something like 'there should be laws / regulations making it so that banks shonky investment dealings can't affect depositors accounts, at least for some class(es) of depositors' - in which case I agree.
I didn't say any of that. Banks should never be too big to fail. The only question is which of the bank's account holders should the government preferentially bail out by printing money equivalent to the holders' deposits.
Regardless of the actual dollar amounts changed hands, what the US Federal government demonstrated was that risky - even illegal - behavior will be covered and some losses will be covered. It means that next time (and there will be one), we should assume the risks and losses will be even bigger.
But more seriously, why did the resolution have to be a bailout. Could someone with the authority, and here I mean The Government, because they've got the guns, just tell the banks to rollback the wonky transactions?
[0] Legal or not.
He got people to withdraw over 600 million from DSB Bank in a few days, which caused the bank to run out of liquidity and forced them to freeze accounts. This meant they lost all trust in the market and needed to ask other banks for emergency financing. All other banks declined (with good reasons, a bank falling apart combined with pending legal action on the mortgage side is a very high risk for them to take).
So within three weeks DSB was bankrupt. More here: https://en.wikipedia.org/wiki/DSB_Bank
I can imaging some disgruntled customers going after Wells Fargo in the same way. They have severe legal action pending (which makes them risky for others to save) and have destroyed their image by their reactions to this (which makes it easier to motivate customers to take action). All ingredients that killed DSB are there... The only difference is that DSB was one of the smaller banks and Wells Fargo is huge.