On Moral Hazards

One argument against bailout is that it creates moral hazards- that banks don't have to worry about failing because they'll get bailed out.

I don't think the critique is all that meaningful

Banks don't make decisions, the people who run them do. So in order for the this moral hazards argument to work, the people who ran the banks must benefit from this bailout. This is where the moral hazards argument breaks down- for example, the CEO of AIG has to accept a $1/year salary as a result of its insolvency. It's hard to see how he would willingly incur all these losses on the knowledge that AIG would be bailed out. How did he personally benefit?

This is no to say that there are no good arguments against bailouts, but I'm not convinced having a government backstop played a large role in the decision making process that led us to where we are right now. Not when the people who made these decisions do not personally benefit from the bailout in any meaningful fashion.