Remember, the 2 most important people for a bond issuance are the issuer and the bond dealer.

for treasuries, the issuer is the taxpayer, & the dealers are the big banks (broker/dealers: goldman, morgan stanley, merrill, lehman, bear; banks:citi, bofa, wachovia, etc.).

so our gov't is dependent on the banks and the bond market in order to raise funds. if either one collapses, everything collapses.

that's one reason why everyone was so surprised that they let lehman fail: lehman was one of the biggest US gov't bond dealers in the world, and one of the few still in the US (countrywide and bear stearns went out of business too).

but the banks are dependent on treasuries, b/c they make up significant portions of the capital base on which they provide credit. ready, easy access to plentiful, deeply liquid, AAA UST securities is one of the reasons US banks have been able to provide so much credit, by using them as a capital base on which to lend.