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Contrary to popular belief, which blames the global financial crisis on subprime borrowers, it was the derivatives, based upon the likelihood that those borrowers would pay their debts, that were the primary catalyst triggering the global economic crisis of 2008. Back then, the derivative obligations of AIG (AIG) imploded the insurer. Under the pressure of fear-mongering from the Federal Reserve and the financial industry, the U.S. government committed hundreds of billions of dollars to bail out AIG's counter-parties, including the biggest banks of Europe and America. Had the government not stepped in, virtually all the banks on Wall Street would have gone bankrupt. A host of European and Asian banks would have followed

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I couldn't agree more that AIG should have failed as the article states, as well as the other insured that gambled this way.

What's to prevent someone from making stupid/greedy decisions when they know there's no price to pay?

Big failure would have harmed the economy short term, but the "flushing out of the stupid" would have been best for us.