Neil Barofsky, appointed to investigate TARP (Troubled Asset Relief Program),said “The conclusion of the various government actors that Citigroup had to be saved was strikingly ad hoc.”
This is an application of the precautionary principle, that applies government fiat against technical progress that might upset the status quo - whether in medicine, genetics or aviation. While US entrepreneurs and innovators are the world's most prolific, the US government is moving in the opposite direction, spending huge sums of tax payers money on trying to preserve the status quo.
In the Citibank case, this consisted of 45 bn of emergency infusions, plus government backing of 300 bn. of Citi assets.
Putting such enormous sums behind an organisation that had clearly taken excessive risk creates "moral hazard"; as Barofsky said, "the prospect of additional government relief may encourage excessive risk-taking by executives".
Ironically, the same desire to be precuationary has the oppostie effect on technology - discouraging risk taking. This is a perverse outcome of conservatism in government- encourage risk in financial bets, discourage innovation in technology!