Médaille explains

A few of the money-center banks, some insurance companies and many hedge funds made a series of bad bets. They are insolvent. There is a procedure for insolvency. The banks should be go into receivership and be broken up. The losses should be written off, and that’s that. Nothing new or radical in that solution, it happens time and again…
Even if the [bail-out] plan works, it will fail, because it doesn’t address the underlying problem. And that problem is that we no longer make what we consume. Unless we restore the real economy, the economy that makes real things and provides real services, we cannot restore the banks. Even solvent banks require productive enterprises to which they can lend money. But we ran out of these a long time ago. There simply isn’t enough demand, even in good times, for loans from our diminishing productive sector. Hence, the banks turned to lending it for houses people couldn’t afford and credit they shouldn’t be using, but must because the wages are too low. Making the big banks solvent again will not provide them with solvent customers. That can only come from a restructuring of the economy that shifts us back to real production rather than financial black magic. If we restore the economy, restoring the banks will be a trivial problem. If we do not restore the economy, it simply will not matter how â??soundâ?? the banks are.
John Médaille Worst Bailout Ever
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