I think the issue at the time was that none of the big banks/financial entities trusted each other anymore. Everything was grinding to a halt and one by one companies were collapsing and having to be bailed out by the US government. I think a point was reached where it was decided to let Lehman fail, stress test the system in order to see who was really solvent and who wasn't and then prop it backup and reinflate it.
Oh I got the impression it was more a philosophical idea "moral hazard" was allowed to proceed, then it scared everyone. I seem to recall the Governor of the. Bank of England saying Lehman was an example of avoiding the moral hazard of bailouts then 24 hours later bailing out started.
There is a good podcast on LSE / iTunes with Adair Turner and Buttonwood Writer from The Economist who are the fire I have heard to beyond "Banks and fraud and regulation" and into "Global savings, infinite credit" and suggest things like 100% reserve banking (ie no credit if not created by central banks)
It's worth listening too even if it's rather uneven.
Oh there was an element of that in there as well. But bear in mind before Lehman they'd bailed out AIG I believe to the tune of 200billion USD? I think to keep effectively writing blank cheques to cover Wall Street's fuckups was becoming increasingly untenable. I think they were faced with three choices, keep bailing out publicly which was politically untenable, bailout on the quiet which would likely have ended up with Japanese style Zombie corporations or let Lehman fail and get the worst over with.
