[alephnil]

There are no examples of a bank crisis in a country of the size of the US economy other than the one in 1929, and I guess nobody want to repeat that receipt. That is probably what a purer capitalist/liberalist would prescribe still.

Of larger nation than Iceland Norway and Sweden handled the bank crisis around 1990 by nationalizing the banks and adding to their capital reserve. The shareholders lost their money, but the banks were able to recover in not too many years.

The worst thing that can be done is a bailout. In that case the people that took unnecessary risks for their own short-term gain are rewarded, and everyone else have to pay.