TARP prevents the sky from falling

Some people think that Wall St is the entire US economy. It's an easy thing to believe if you work on Wall St. For instance, Henry Paulson, Bush's secretary of the treasury was a long timer Wall Streeter, prior president of Goldman Sachs. Or Ben Bernanke, chairman of the Federal Reserve, academic whiz kid specializing in the history of the Great Depression and prior head of the New York Federal Reserve Bank.
Two senior guys, steeped in Wall Street saw the sky falling in October of 2007. Lehman Brothers went bankrupt, AIG ran out of money, Merrill Lynch (remember them?) went bust and got bought. These two guys feared that failure of the big boys would bankrupt everyone else on the Street. Street trading is incestuous, everyone trades with everyone else. If the biggies go bust and default on their debts to the smaller players, the small guys might go bust too. To Bernanke and Paulson, widespread failure on Wall Street might wreck the US economy and trigger off Great Depression 2.0.
So, being men of action, Paulson and Bernanke went to the Democratic Congress and said in effect, "The sky will fall on Tuesday". Congressmen believed them, and $750 billion TARP was passed to bail out the losers.
The alternative was to let the more foolish Wall St players to go broke as a warning to others. They tried this with Lehman Bros, and it was scary.
With hindsight, I think we should have let more Wall Streeters, the ones that didn't (still don't) understand the difference between gambling and raising capital to finance economic expansion, go under. It's clear that a lot of Wall Street business, mortgage backed securities, credit default swaps, and secondary mortgage trading is pure gambling. And I see no reason for taxpayers money, my money, to bail out gamblers who go bust. The economy doesn't need gambling.
Back three years ago, it was a harder call. Seeing famous old time Wall St firms go bust was scary and the urge to "do something" was strong. So something was done. The downside is everyone thru out the entire world now believes that the US government stands behind all the big Wall St firms. Which allows those firms to take bigger risks and borrow more than if lenders worried about them going broke ("counterparty risk" they call it). And makes us taxpayer liable for humongous debts everytime some Wall St executive makes a dumb bet.