Should banks be bailed out by the general public?

No. To me one of the great disappointments of the past few years is watching political leaders (of all persuasions) being beholden to Wall Street.

There is a good NY Times column The Path Not Taken by Paul Krugman. It puts the recent decisions of European political leaders in a broader context, suggesting it amounts to:

the abject failure of an economic doctrine — a doctrine that has inflicted huge damage both in Europe and in the United States. 

The doctrine in question amounts to the assertion that, in the aftermath of a financial crisis, banks must be bailed out but the general public must pay the price. So a crisis brought on by deregulation becomes a reason to move even further to the right; a time of mass unemployment, instead of spurring public efforts to create jobs, becomes an era of austerity, in which government spending and social programs are slashed...

Krugman, then points out that there is an alternative.

... Iceland was supposed to be the ultimate economic disaster story: its runaway bankers saddled the country with huge debts and seemed to leave the nation in a hopeless position.

But a funny thing happened on the way to economic Armageddon: Iceland’s very desperation made conventional behavior impossible, freeing the nation to break the rules. Where everyone else bailed out the bankers and made the public pay the price, Iceland let the banks go bust and actually expanded its social safety net. Where everyone else was fixated on trying to placate international investors, Iceland imposed temporary controls on the movement of capital to give itself room to maneuver.
So how’s it going? Iceland hasn’t avoided major economic damage or a significant drop in living standards. But it has managed to limit both the rise in unemployment and the suffering of the most vulnerable; the social safety net has survived intact, as has the basic decency of its society. “Things could have been a lot worse” may not be the most stirring of slogans, but when everyone expected utter disaster, it amounts to a policy triumph.

Christians should have something to say about this. We should be concerned with both individual responsibility and accountability [bankers and investors] and protecting the poor and needy.