I don't understand how that would work. Even the Fed can't backstop every company looking for short-term financing. How will they pick and choose exactly? This makes the survival of one firm vs. another basically a political crapshoot.
Unintended consequences: a) On Tuesday, Ireland, concerned about a run on its banks, guaranteed all their deposits
b) The next day, the Irish banks start calling UK bank customers and suggest they transfer money to their banks
c) On Friday, Greece guaranteed all of its banks deposits
You now have two Euro-denominated countries with unlimited deposit insurance and others without unlimited deposit insurance. Unless someone restricts the program, either the rest of Europe will have to do the same or you will see deposits flow to those countries, weakening the countries they are leaving from but ultimately destabilizing even the recipient countries.
These events either start to push the Euro apart or, more likely, force Europe to integrate more closely from an economic and regulatory perspective.
How can Wells Fargo pay $15B more for Wachovia than Citigroup when Citigroup had the government backstopping losses on $250B in assets and Wells Fargo has no government support. Either Wells Fargo or Citi/FDIC did their math very very wrong.
a) Either Citi was getting the steal of the century and let it slip through its hands
b) Wells is going to blow itself up 6 months from now
Time will tell...