Now for something controversial ...
Seeing as we're talking about banks, the mistake was made 2-3 years ago when there was a run on Northern Rock. Like it or not, the best cure would have been to let it go under. The other banks would have picked up the pieces.
I appreciate there would have been loads of redundancies and many more people would have had to pay their mortgages (as they were in debt to Northern Rock) and many other problems but if we (as a country) had gone through the pain then we'd be climbing out of it now. Instead, the agony of continued worry (banks not lending, businesses struggling with lack of overdraft facitilities, low mortgage lending, etc) still haunts us and not many are confident things will be much better this year. Labour couldn't let Northern Rock go under as it was in one of their stronghold constituencies.
When a household has to face debt problems the "institutions" do not show much sympathy so why should we do the same to the banks (like Lloyds, RBS, etc)? There are too many banks lending too much money and the government is borrowing too much too.
In a true capitalist economy you don't bail out the companies that fail. It's survival of the fittest.
On a lighter note, I reckon Jeremy Clarkson should be Prime Minister, Terry Wogan the Chancellor and Peggy Archer (is she still in the script?) in charge of the NHS and Welfare.