It cannot solve the economic problem

The FDIC is broke (although not without additional Fed/Congress credit access) so is not closing banks that should be closed. Bank closures are occurring when they collapse under their own weight rather than FDIC guidelines. Thus, losses are bigger and taxpayers pay more as this game of pretend and extend goes on. I believe we are in much worse shape than we are being told and that it is a bigger problem than the government can handle. I also think the government knows this and that facing up to it would destroy the dollar and/or country). Hence the pretend game. Unfortunately the extend strategy will not work because underlying asset collateral continues to decline and will probably do so for the next several years. The pretend cannot go on for that long.
The banking system is insolvent, period! Using honest accounting would reveal that condition and expose the house-of-cards economy created via credit over the past 2 or 3 decades. The problem is probably still economically solvable but politically intractable so the government hopes to paper it over. Enron-type accounting is allowed to enable banks to keep exposure on non-consolidated subsidiary books. Banks are allowed to value assets at whatever they deem them to be worth rather than accounting standards that have been in place for centuries. Condoning this fraud may defer the political problem. It cannot solve the economic problem and likely makes it unsolvable at some point. Market forces will eventually overwhelm the charade, and put our entire economic system at risk of implosion.