The solution to which firms get to fail is very simple. When a common stock based company fails, the common stock goes to zero, and subsequently the debt flounders until the stressed assets are put in a more productive mode. Usually this means a haircut on the debt, whereby the human emotion runs strong literally giving assets away, whereas smart vulture firms find the meat. This is capitalism. When the government steps in , preventing the haircuts, or the failure of equity, then the result is socialism. At this stage, a government imposed type of price fixing interferes with the market's pricing mechanism. http://www.bloomberg.com/apps/news?pid=20601109&sid=a0v71H6gketc&refer=home .......................................................................................... The SEC is also catching the disease. The SEC thinks that limiting selling, and not limiting buying is a logical way to prevent harm to the markets. What the SEC is doing is interfering with the pricing mechanism that only markets should be performing. .......................................................................................... Let there be no question that both the SEC and the FED are making a mockery of capitalism, and have failed capitalism. The market, and not government impostions should be in control of prices.
Bernanke has his 'erase moral hazard' defenders on this site, and they are often rabid in their blind loyalty to him. Bernanke never met a socialist program he disliked, as long as it was designed for the most incredibly asinine, reckless, risk-assumptive financial institutions that have so haplessly and destructively spread money in layers three and four yards high in ever-creative inefficient ways across the globe - and as long as the U.S. taxpayer will ultimately absorb most of the tab for this financial promiscuity (even the most prudent savers among them).