>Nor is there any dispute that all of these banks would have failed had the loss of liquidity and confidence been left to market forces.

Many bank are disputing that they would've failed. That's the point. They were never given the chance to succeed without government "help".

>Anybody with more than 100K on deposit would have had to scramble to get it out, the FDIC would have found itself in charge of all these banks that now resent a small government shareholding in exchange for solving the liquidity crisis and after the crash the government could have imposed truly draconian legislation that would have been welcomed by the desperate citizenry.

The "draconian" legislation is here. The federal government has assumed a controlling interest in private entities. It's not limited to banks and AIG. They're looking into all aspects of private business for takeover. Geitner has already mentioned insurance publicly. Congressional representatives have spoken publicly about energy and health care. There is no limit to the potential takeover based on the current model.

>But all that seems to be forgotten. Instead some people keep saying that government is not your friend:

The government is not your friend. It is the single most oppressive force against individual liberty in the history of mankind.

>well guess what, US bankers aren't your friend either. Surely we've learned that if nothing else. They trashed the place and ran for cover knowing full well what was about to occur.

I've never claimed otherwise. In fact I've mentioned it before that they cannot be trusted and we've known that for centuries. I've posted before about Glass-Steagal.

>So here's my question: if these banks were so strong, how come they didn't band together to pony up the $ to keep AIG going- something they absolutely needed to keep their own banks afloat? Not a bean was on offer from these people.

So if I follow your thought process...The banks should've bailed out the insurance company from which they're collecting insurance for failed investments? Huh? Why limit this thought process to the banks? Anyone currently collecting an insurance claim from AIG should pony up some cash to insure against their own insurance?

>Which is what Greenspan said: he'd thought that the market could be relied upon to act in its own interests, but in that he was mistaken. And now these people resent a small shareholding for the entity that stepped after the private market proved itself to be a failure. Sheesh.

We're not talking about a small shareholding in the common stock sense. We're looking at specially created new form of preferred stock specifically for the federal government which subjects the companies to all manner of governmental intrusion into private business. Again, this is not in dispute. In addition, we're now seeing how the rules are changing at the whim of the regulators. Since the TARP money was allocated a new set of rules has been enacted, including compensation requirements and massive payback interest rates of 60%.