IOW, allowing huge banks (E.g. Bank of America) to buy large banks that were in trouble (e.g. CountryWide) was a way to bury the losses for a while, in the hope that the economy would recover enough to minimize the total overall losses. The "kick the can" approach.

So far, it has worked because the banks haven't had to write off the huge losses yet.

(The alternative was something like bankruptcy of CountryWide which would have forced other banks to immediately take their losses, putting more pressure on the banking system and the economy while it was already in freefall.)

But...

BOA is finally starting to propose settlements on lots of their bad loans - http://www.calculate...a-settlement.html

They're just one of the big players - more are waiting in the wings.

Last week there was talk of a $60B settlement for foreclosure issues - http://www.calculate...age-servicer.html

Maybe kicking the can was the best approach. I dunno. But reality eventually catches up - someone is going to have to eat the losses eventually. Presumably that means these TBTF banks are going to shrink (possibly by getting eaten by other huge banks. :-(

This isn't over by a long shot. If/when Greece defaults, it'll add yet another layer of complexity on top.

Cheers,
Scott.