Basically you're saying if counterparties who CHOOSE to take on the risk of doing business with an entity overexposed to the mortgage market face losing money, those counterparties should be protected at the expense of the taxpayer because having financial firms that don't conduct proper due diligence in choosing whom to take on credit risk with are "necessary for the functioning of the economy." Get real. The IBs are all a scam, the fact that they've gotten so deeply entangled into our economy that they can cause it slow down when they fuck up shows just how little we need them and how they are a leech on society. I can't imagine how you make any money trading if you not only can't see through basic Wall Street propaganda but you go around perpetuating it.