Tell me FoC, what does allowing banks to fail even mean in an environment where top executives are collecting upwards of $100 million for a few years work? Think of what human beings will do for $100, and then multiply that tendency towards deceit & infamy by one million. CEOs and their yes-men Boards will never stand in the way of a fast buck for themselves even if it means the very next guy gets saddled with an impossible mess (see also: Bush administration). The fact that the bank itself might cease to exist is simply not sufficient motivation for them to do anything. Even jail time tends to be a joke for top-level financial fraudsters (see Michael Milken, who was jailed at his multi-million dollar beach home and was 'released' still having a net worth of over $1 billion).
It goes on down the line. Most of the ex-Lehman people in Japan have been snapped up by rivals for salaries commensurate with what they got at Lehman. Japanese banks were delighted to get them! There is no stigma attached to having been part of a failed bank. There may be a few scapegoats, but those are typically people at or near the end of their careers who have more money than God and the best lawyers on the planet to plea-bargain their sentences down to nothing. I'm all for justice and bloody retribution on general principles, but it's not going to make any difference on how financial institutions are run on a day-to-day basis.
