When they throw the term 'too big too fail' around, they mean it in the literal sense: That the banks losing these bets would literally bring down the American -> World economy.
What _is_ missing is that no one was punished, no laws were changed (or have recently been relaxed even further?), no structured breakup of the bad actors. It means theres no incentive to _not_ risk global economic collapse, even though the words global economic collapse should be incentive enough.
I know that the modern conception of business since the 1980s is that if the profit margin of a business is not growing that it might as well close its doors, but once it is recognized that the banks are doing more than simply engaging in commerce, but are actually providing infrastructure necessary to maintain our society... it certainly seems their classification ought to change, especially given the historical proof of the power of money to corrupt. It just doesn't seem to make sense that it could be both critical infrastructure and also something that should remain private with as light a touch as possible from government (viewing government as a hand through which the public can act to protect themselves, I know that's not always how it shakes out).
There should be lots of regulatory effort to reduce interdependence and make it easier to unwind bad banks though.
Other? I would have thought (I am no economist so I apologize if this is daft) that the sensible response would be to permit all of the banks who engaged in gambling to actually lose their bets and suffer the consequences of their own actions. Those which extended loans which could not be repaid should have entered insolvency, with the debts owed to them eliminated. Likewise, the fraudulent practices conducted should have resulted in hundreds or more of banking executives and other employees sent to prison.
It would seem to me that the solution we settled upon - giving them titanic amounts of money, assisting their consolidation, and playing pretend as if the fraudulent loans issued were still owed by those who they were foisted upon, foreclosing on homes, and significantly derailing, if not destroying, the lives of hundreds of thousands of families - was the 'other economic system' here. It certainly was not the one laid out in black and white on paper and followed for a century or so. Under that one, when you extend credit to someone out of funds you do not have, then place bets on repayment while lying about the odds, you crash rather than luxuriate in the spoils of a looting of the masses.