I've had the opinion for a long time now that the real problem at the heart of the financial crisis is the banking sector's refusal to accept the seriousness of their situation. They gambled and made obscene amounts of money on junk mortgages, and as things go at the casino, they finally lost their shirts. The key word is "insolvency." The financial sector is insolvent. But denial remained strong, and likely will for a little while longer.
Simply dumping this massive garbage pile onto the taxpayers won't work. And simply hoping that the magic pony appears to buy up all the toxic assets won't work either. The banks created a phony housing bubble. They gambled. They lost their shirts. Now they are insolvent and will have to require some sort of government intervention. A short-term nationalization plan, ala Scandanavia in the 1990's, is the consensus opinion from economics.
Roubini and Richardson make their case for bank nationalization in the Journal today. Pay attention. They know what they're talking about.