Very good analysis here.
Bank failures: Towards an « Icelandation » of the banking crisis’ management
In the face of this shock, our team estimates that most countries, including the United States, will approach management of the crisis in an “Icelandic style”, i.e. not to bail out the banks and to let them collapse (16). We have already had a glimpse with the liquidation of the Irish bank IBRC which has given many people ideas: “How Ireland liquidated its banking albatross in one night” headlined La Tribune (17) admiringly. This possibility seems to increasingly be the solution in the event of the banks backsliding, for the following reasons: first, it seems much more effective than the 2008-2009 bailout plans judging by Iceland’s recovery; second, countries don’t really have the means to pay for new bailouts anymore; finally, one can’t deny that it must be a big temptation for leaders to get rid in a popular fashion of part of the debts and “toxic assets” which encumber their economy.