That's banking today: It has grown from an almost quaint relationship between teller and customer into a massive, dizzyingly interconnected network that touches almost every adult in this country.

The federal government, working without a road map or a net, is putting together a plan -- just to keep U.S. banks alive.

Financial industry experts said it is a matter of choosing the best of several options, none of them very palatable.

No one knows what will work, because nothing like this has happened in living memory.

Getting it wrong could trigger a replay of what happened after Lehman Brothers collapsed last fall -- the stock market in free fall, seizure of the credit markets, ripples of layoffs. Perhaps even a run on other banks.

"The banks are at a terrible junction," said Robert Reich, a labor secretary under President Bill Clinton. "The bottom is falling out. Almost every area of the credit markets, we're finding people unable to repay their loans. That means many banks are basically insolvent."

"If one big bank implodes," he said, "the reverberations could be endless."

So how did we get into this mess?

And how do we get out?

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Most financial experts agree that a cocktail of bad economic policies and lax government oversight led lenders, borrowers and investors to take huge risks.

To understand how the things went awry this time, go back a couple of decades.

Banking was a simpler affair, and a no-nonsense one: If you didn't make enough money to qualify for a loan, you didn't get one.

But in the 1980s, falling interest rates and loose lending standards opened banking to the masses.

Credit was cheaper, and the government wanted more Americans to be homeowners. The housing boom was on.

Banks and savings and loan associations, or S&Ls, spread across the country offering cheap, 30-year mortgages. By 1980, banks had $1.5 trillion in outstanding mortgage loans, more than double the amount from 1976.

It was, said Eugene White, an economics professor at Rutgers University and an expert on the Great Depression, all about the government's postwar policy of selling a "piece of the American dream."

Then came the bust. Unable to pay their mortgages, homeowners and businesses began defaulting in droves. Deliquencies soared, battering the stock market and prompting a huge, taxpayer-financed bailout.

Fast forward to today.

Some ingredients of the S&L mess, such as cheap credit, loose lending standards and weak oversight, are part of the current debacle. But two new trends -- global banking behemoths and the packaging of debt into securities that investors could buy and sell -- made this meltdown unique.

And much worse.

In the span of a decade, Citigroup, Bank of America and JPMorgan Chase, once bread-and-butter providers of free checking accounts, grew into international banking conglomerates that buy and sell stocks and manage assets for fees.

The "universal bank" model, which took hold in the late 1990s, changed the face of global finance. And it linked Main Street with Wall Street in a way never seen before.

Banks became ubiquitous in American life. From 1995 to 2008, the number of bank branches grew from 81,000 to 99,000. Over the past decade, ATMs swelled from 187,000 to 406,000.

These banks lured first-time homeowners with attractive lending rates and lax requirements. Bad credit, no credit -- almost anyone could get a loan.

But instead of holding on to the loans themselves, a modern version of the old pen-and-paper model, the banks bundled them into securities and sold them to investors across the globe.

In a flash, a mortgage for a home in California or Florida could be sold to a hedge fund in London or Singapore.

Before that, credit was based on the ability to pay back the loan.

"But now it was based on the lenders' ability to securitize the loan and sell it," said Barry Ritholz, a financial analyst. "That is absolutely unique in the history of finance."

Using vast sums of borrowed money, Goldman Sachs, Morgan Stanley and other investment banks bought and sold mortgage-backed securities and other complex financial products, reaping astronomical profits that helped pay for outsized bonuses for executives.

But the good times didn't last.

When the housing market began to decline in 2006, the collapse of subprime loans caused massive financial losses at the big banks and claimed the first casualties of the financial crisis.

Then, early last year, Bear Stearns, a venerable 85-year-old investment bank, suffered huge losses tied to subprime securities. Its stock plunged, and investors raced to pull their money. Bear Stearns was bought by JPMorgan in a government-brokered fire sale.

Six months later, the crisis spread to Lehman Brothers, a 158-year-old investment bank that helped finance America's railroads. This time, the government didn't step in.

Lehman collapsed in the biggest bankruptcy in U.S. history. Banks around the world stopped trusting almost anyone, and lending dried up.

Seemingly overnight, two of the biggest names in global finance were gone.

The Dow Jones industrials plunged 2,400 points over eight straight trading days in October. By late November, retirement accounts were cut almost in half.

To many observers, the big banks broke one of Wall Street's cardinal rules: Be greedy, but be greedy over the long term.

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This January, the government took over six failed banks, including three on a single day. Last year, it took over a total of 25.

When it happens, the government tries to minimize disruption. It has tended to close banks on a Friday and achieve something close to business as usual by Monday morning, arranging for other banks to take on the assets.

So far, most of the failed banks have been relatively small. But what would happen if one of the nation's big banks, the kind that manage hundreds of billions in assets, went down?

"That would probably cause a complete meltdown of the American financial system," said Andreas Hauskrecht, an associate professor of money, banking and finance at Indiana University.

After the financial crisis accelerated last fall, the government increased the limit for the amount of bank deposits it will insure for individual depositors, from $100,000 to $250,000, effective through the end of this year.

And while few Americans have to worry about keeping anything bigger than that in the bank, the government could eliminate the limit altogether and insure all deposits regardless of size if a huge bank, such as Citigroup or Bank of America, were to fail, said Jim Wilcox, a professor of financial institutions at the University of California at Berkeley.

No one has ever lost money in an account insured by the Federal Deposit Insurance Corp. But no one has ever seen a bank that size go under, and news of a giant bank's downfall would probably touch off a panic.

But there's a bigger economic problem: Other lenders, which hardly trust everybody these days anyway, would stop trusting anybody. Businesses, unable to borrow money day to day, would fail, with worldwide consequences.

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So what now?

Financial experts don't expect the United States to go the way of Iceland, where a collapse of the banking system last month threw the tiny country into turmoil and toppled the goverment.

What keeps them up at night is a scenario closer to that of Japan, which bungled its own bank bailout in the 1990s and limped along during a "lost decade" of anemic economic growth and high unemployment.

To prevent that, the Obama administration must choose the best of many difficult options. The emergency medicine prescribed by the last administration -- flooding the financial system with billions of dollars -- hasn't worked.

One idea under consideration is the creation of a government-run aggregator bank, or a "bad bank," that would buy up hundreds of billions of dollars in banks' toxic assets. The government may also pump more money into banks and offer billions in dollars in guarantees against future losses.

But no single fix is seen as a magic bullet.

"The longer they wait, the more damage there is to the economy and the more it will cost taxpayers," said Frederic Mishkin, an economics professor at Columbia Business School and a former member of the Federal Reserve Board.

In theory, the government-run bad bank would buy soured debt that's gumming up the banks' books and clogging the flow of credit.

But in practice, it's far from simple.

For starters, no one -- including the banks themselves -- knows how much these assets are worth; pricing them is tricky.

If it pays too little, the government risks forcing banks to record huge losses, putting them out of business and wiping out shareholders. If it pays too much, it risks shortchanging taxpayers by hundreds of billions of dollars.

Even if the government figures out how much to pay for the assets this time, the question is how much to buy.

Goldman Sachs estimates the government would need to shell out $4 trillion or more to absorb all the banks' troubled mortgage and consumer debt.

How big is $4 trillion? It's more than one-third of the economic output of the United States in a year. It's more than twice as big as the federal bailout and the coming economic stimulus combined.

Another vexing issue: Who would be in charge of poring over the banks' books and valuing the assets? Experts said the people best qualified to do that are the ones who created the faulty products -- Wall Street bankers and other investment professionals.

"We're asking the same people who got us into this mess to get us out. These are the guys who buy airplanes and decorate their offices for a million bucks," said Bill Seidman, a former chairman of the FDIC who ran the government bailout during the S&L crisis.

Seidman and others are calling for an alternative rescue plan that they said would avoid the pitfalls of past efforts: a short-term nationalization of the banks, as the U.S. government did in the S&L debacle of the 1980s.

With Seidman at the helm, the government-run Resolution Trust Corp. took over failed S&Ls and sold off their depressed assets.

During the next six years, the RTC sold nearly $400 billion in assets of more than 700 failed thrifts. Then it sold the cleaned-up S&Ls into the private sector.

The cost to taxpayers? About $125 billion to $150 billion by the time the bailout was completed in 1995 -- about 2 percent of a year's gross domestic product at the time.

Seidman believes it would cost taxpayers far less because the government wouldn't have to buy bad assets or inject more money into troubled banks.

But nationalization isn't a sure thing either.

In the S&L days, the government recouped some taxpayer money by selling physical assets of the banks, things like real estate and cars -- not the hard-to-value paper assets held by banks today.

That wrinkle makes it much harder for the government to follow the RTC strategy, said Jonathan Macey, deputy dean at Yale Law School and the author of a book about a government bailout of Sweden in the 1990s.

"We're not talking about valuing buildings and dirt," Macey says. "This is quite a bit different."

In other words, it's uncharted territory once again.

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