I disagree. Take a midsize bank market cap of $5B and multiply it by 25-50 for the number of banks that might fail. That is a total loss of around $125B-$250B

I disagree. Take a midsize bank market cap of $5B and multiply it by 25-50 for the number of banks that might fail. That is a total loss of around $125B-$250B for which shareholders and employees of these companies bear the losses. Also should these banks fail, the government will have to step in via FDIC. The problem with this is that assuming an average balance of $10000 per depositor $700B covers 70 Million accounts. While this is probably sufficient for average individual depositors, what is to happen to the small businesses that have greater than $100k in assets? Also, what happens to the availability of credit with so many banks in default? Bankruptcy actually seems more risky, as the people who would lose are small businesses and those with over $100k in the bank, people who would never have recourse to get their money back. Rather than socialized losses (through inflation), its losses for an unlucky few. The bailout plan, however, which involves taking warrants in the companies we are giving money to seems to have a good chance of repaying at least a significant portion of what it costs overall. Thoughts?