Late to the discussion, but the alternative to the bailouts was to not bailout, and let the problems unwind. As mortgages were sold at firesale prices to attem

Late to the discussion, but the alternative to the bailouts was to not bailout, and let the problems unwind. As mortgages were sold at firesale prices to attempt to remain solvent, it would be in the interest of the purchasers to lower the effective rates on the mortgages, because they could still book a profit at the lower rates. The net effect would have been to cripple most of the national banks to the point where they would have to be liquidated and purchased piecemeal by smaller banks and local credit unions that managed to behave responsibly during the crisis. The FDIC already exists and has a mandate to draw unlimited funds to make customers whole up to the limits. This is already priced in. As to what would happen as companies failed to make payroll as their banking arrangements failed, it's likely that there would have been problems along the way, but the existing credit markets, especially short-term consumer credit (i.e. credit cards) would have allowed most households to stay solvent while the banks reorganized around the new reality. I'm far from convinced that there would have been a depression -- for the most part I believe that it would have self-corrected on an individual or company basis except for the finance sector, which created the crisis in the first place.