Why? Loss of tax revenue to the government resulting from a depression is certainly money that the government needs to factor into the calculation.

Because it's embracing too big to fail. Unless we want 'too big to fail' to be the rule going forward, and unfortunately it seems that it will be, we should reject the idea that the rest of us are the beneficiary of having to bail out the banks.

Whether we embraced it or not, it was part of the calculus. So was the fact that we'd need continued investment into the economy to work our way out of the financial collapse. That meant that options like nationalizing banks, which might drive investment overseas in the future, could have a direct negative economic impact that needed to be considered.

The total loss in tax revenue over the Great Recession period is measured in trillions.

http://2.bp.blogspot.com/-nkdzCkw8Rr0/U-qiPe1Tf-I/AAAAAAAARS...

I'd suggest that's a much more direct and obvious economic impact than some maybe-perhaps about driving investment overseas. (How, exactly? Do you think money would suddenly stampede out of the US if regulators developed a spine and jailed the delinquent operators who caused the crash?)

Anywway - clearly the decision was political. It was made for the benefit of the banker caste, and not for the general population.

The underlying problem is unearned privilege.

There's no rational reason for these bonuses. But bankers pay themselves these sums because they know they can, irrespective of the incredible damage they cause to the rest of the economy.

Sure, I agree that we had no choice at that point but to bail the banks out.

But when reviewing the decision afterwards, I think we need to reject lines of argument that the government did really great on the deal so it's not that bad what happened. We don't want it to happen again, we don't want to be in a no-other-options situation.

Sure but so is the danger of going bankrupt for the banks or being completely nationalized.

Also the country would survive a depression if it really came down to that, the bank wouldn't survive a bankruptcy.

So the playing field are fairly even when it comes to having leverage.