These banks had to be bailed out because the ripple effect would destroy the economy and that would have been very disruptive even to companies and individuals

These banks had to be bailed out because the ripple effect would destroy the economy and that would have been very disruptive even to companies and individuals that had nothing to do with the housing crisis. Even with the bailout, many suffered. But I agree with you that the way they bailed them out did not hold them accountable, they should have "invested" in those banks by buying newly issued shares which would have completely wiped out the existing shareholders. However, rather than the normal way to raise capital, they gave a blanket permit to the federal reserve to buy the bad debt from the banks. The US government and the people by extension should have become the owners of those banks which they could resell the ownership again on the private market with a profit at a later point.