[throwawayjava]

But it might go away for a year or two, which is enough time to do an incredible amount of economic damage -- far more than what we save by not bailing them out.

They don't need to be indispensable. they just need to be critical enough that not bailing them out is much more expensive than bailing them out.

The solution is to prevent this scenario from ever happening in the first place, by either requiring sufficient competition, or requiring sufficient capital reserves (see: banking and reinsurance), or just nationalizing the thing.