[BfloGuy]

Perhaps emergency liquidity from the Fed to a bank could be conditioned on a provisional voiding of non-salary compensation and shareholder equity, with eleigibility to have some or all restored based on an independent evaluation of the bankers’ conduct.

Such a condition would be too subjective in my opinion and subject to politics and cronyism [but I repeat myself]. There should be no "emergency liquidity". The bank should declare bankruptcy as would any other business.

[Rockingham]

The level of subjectivity would depend on how the rules were written. Clearly written rule backed by federal court review by any aggrieved party would provide judicial supervision and a check against favoritism and abuse.

For decades, emergency liquidity through the FDIC has been the norm in US commercial bank failures. The core of the 2008 crisis though involved Wall Street investment banks that were not chartered as commercial banks, so the policy innovation was in providing emergency liquidity based not on a system of deposit insurance but on Wall Street's systemic importance and to prevent failures of insurers and pension and investment fund in the US and Europe.