I heard the first 50 minutes or so of a one hour edition of This American Life dedicated to explaining the banking crisis in terms that can be understood by any reasonable smart (or even not so smart) person. The bottom line: Nationalize the banks, then re-privatize them as soon as possible. One expert said it this way: If you covered up the name of the country involved and showed the numbers to any World Bank operative, they would all say the same thing. Nationalize the banks right now, then re-privatize them as soon as you can. And round up the head bankers and put them on a hay cart. (I may have added the part about the hay cart.)
You should be able to get to a podcast of the show here.