This is my take on what actually caused this mess and why we shouldn't be blaming Obama or Geitner for the solutions they are offering... in a way their hands are tied.
FACT: The Bush Administration raised the leverage limit for financial institutions from 10X capital to 40X capital.
FACT: AIG failed because they added a new layer to their business - trading in derivatives (including credit default swaps which are UNREGULATED)
FACT: The housing crash caused trillions in losses... a HUGE percentage of which were derivatives investments - READ ABOUT DERIVATIVES
FACT: The current derivatives market is roughly $513 Trillion (EDIT: Some view this as a notional amount)
FACT: The value of Real Estate for the whole US is about the same as GDP @ $14 Trillion
FACT: The Bush administration (via the SEC) suspended the uptick rule in 2004 (Uptick Rule) that allowed traders to drive the price of Mortage Based Securities down through Short Selling and caused huge losses in Mortgage Security based derivatives... which caused Mark to Market changes... which caused margin calls and the bankruptcy of these investment banks.
FACT: 40% of the economic growth that was reported by the Bush Administration was based on growth in the financial markets... all of which turned out to be paper only growth... with no real value. You don't hear alot about it... but this was a derivatives trading bubble.
FACT: AIG does business in 130 countries. The US Government provides direct financial guarantees for US based companies that do business internationally.
FACT: Obama inherited this mess and is really doing the only thing he can do to fix it... pay the debt.
FACT: Wall Street is freaking out because they know that the day of redemption is nearing and that the shady financial instruments that have been making them money for years are now going to face huge scrutiny.
It's not Obama's fault that this mess happened. As a matter of fact you can point your fingers directly at Wall Street for selling faulty investments AND the Bush Administration for allowing it to happen. I think it's funny that people are pointing their fingers at Frank, Dodd, Fannie May and Freddie Mac... first of all... Frank and Dodd are politicians... not Treasury Secretaries or the SEC... secondly... Fannie May and Freddie Mac were victims of the derivatives market... the same as AIG, Merryl Lynch or any other bank but didn't participate in the actions that the investment banks were taking... specifically investing in the derivatives market. Their sole purpose is to guarantee loans and sell mortgage backed securities... which were slaughtered by the derivatives market.
I don't want to leave out the responsibility of the SEC... they were asleep at the wheel... and their lack of oversight is criminal at best.