http://hussmanfunds.com/wmc/wmc080929.htm
"What the financial system has needed most has been for Congress to
streamline the bankruptcy process for investment banks, so that in the
event of failure, the “good bank” (assets and liabilities, ex the debt
to bondholders) could be cut away quickly and liquidated to an
acquirer, leaving the proceeds as a residual for the bondholders.
Indeed, that's exactly how it works for regulated banks. What investors
overlooked in last week's panic was that we actually saw the largest
bank failure in history – Washington Mutual – with absolutely no losses
to customers or the U.S. government, precisely because the good bank
was seamlessly cut away and sold to J.P. Morgan, wiping out shareholder
equity, preferred equity, and subordinated debt, with partial repayment
to the bondholders. Snap – just like that."
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