"If the banks holding these complex instruments were allowed to fail, if Lehman Brothers collapsed along with AIG, then it's very likely that the financial syst

"If the banks holding these complex instruments were allowed to fail, if Lehman Brothers collapsed along with AIG, then it's very likely that the financial system would have been dragged down with it. The resulting recession would be likely on the same magnitude as the great depression." Other countries simply nationalize and recapitalize the bank and sell it on. This worked out well for Sweden: https://en.wikipedia.org/wiki/Swedish_banking_rescue https://en.wikipedia.org/wiki/Swedish_banking_rescue Any recessionary impact can always be offset by counter-cyclical fiscal spending.