Secretary Geithner was quoted by the Times as saying that from now on, “no one should assume that the government will step in to bail them out if their firm fails.”
Sorry, but that's just not credible. The Obama financial reorganization blueprint basically says that there are Tier 1 FHCs financial institutions that get special regulation) that are too-big-to-fail (TBTF). For these (today 19?) companies that the administration has decided are guaranteed a bailout. The blueprint refers to a guarantee of liabilities only passingly in its section on special resolution powers for Tier 1 FHCs, but given how we've handled the GSEs, AIG, Bear Stearns, etc., its hard to believe that we wouldn't guarantee the debts of a failed Tier 1 FHC–the whole nature of being a Tier 1 FHC is that there is systemic risk from its failure to honor debt obligations.
This means that for Tier 1 FHCs, their debt is as good as guaranteed by the U.S. government. The implications of this are far-ranging and serious; I haven't worked through all of them, but here's what jumps out at me: