The FDIC does this kind of thing all the time, especially these days. Yes, it would cause some pain and mayhem, but nothing compared to what will probably result from the current paralysis. If the money spent so far on propping up insolvent institutions had instead been put towards FDIC takeovers of insolvent banks, guarantees of their retail deposits, and prosecutions for mortgage fraud a la the S&L crisis, there would be a lot more confidence in the world's economic future by now.
Such a response has only been politically infeasible in the US because the financial industry has such a stranglehold on US political discourse. (See Confidence Men, and in particular its description of the resistance Obama faced when he tried to do this kind of thing with Citigroup.)
Such a response has only been politically infeasible in the US because the financial industry has such a stranglehold on US political discourse. (See Confidence Men, and in particular its description of the resistance Obama faced when he tried to do this kind of thing with Citigroup.)