The Bank Bunker

Free Exchange explains the options that the government has in getting the banking sector back into shape:

... policymakers will not dare take any steps that look remotely like something which could trigger another credit spasm. The costs are simply too great. Policymakers did not see the fallout from Lehman coming, and they will not dare go near such territory again. I'm sorry, but serious pain for debtholders is not priced into the markets. And because it is not priced in, bringing up the possibility of serious pain will wreak havoc.

That is, it should go without saying, a terrible shame.

Obviously it would be desirable to wipe out the debtholders, along with the shareholders and (especially) the management. Given the circumstances, this simply will not happen.

So now we're back to three options, more or less. Nationalise Swedish style with debt guarantees, address toxic assets via some kind of bad bank plan, or prop up the banks with as little public money as possible and wait for them to return to solvency. This is what's feasible, and one of these is what the Obama administration will likely roll out in the near future.