From my understanding, there certainly would have been huge crack in the system had some of the big ones gone down just like that. This is because of the incest-like inter-connection between the major players; if one fails, it reneges on its derivative obligations, leaving several others' "naked" to risk. Those affected by this would have either lower credit rating or may not be able to fulfill their derivative obligations and so on.. domino effect. So, agreed, some of these biggies just had to be stopped from failing (AIG was the king of them) But what I fail to understand is that why is the government supporting these on an on-going basis? I would expect the government to strictly save them on the terms that they eventually wind down the operations or at least break up and sell to interested parties. It is very important for companies to fail every once in a while; in this special case the govt. should have helped soft-land their failure not prevented it!