Was TARP a necessary evil?

That is because QE is not a good way of injecting the necessary demand into the economy. Not only has it failed to create the required demand but it has also not created any inflation (which many governments are hoping to do right now to reduce the real value of their debts). I did say that TARP was deficient in those aspects. I prefer extending tax cuts to the lower earners and reductions in sales taxes to do that. QE has only went into the fractional reserves of banks, which are if anything, too high anyway. It is not the price of credit nor the level of reserves that are causing the restrictions on lending.
Im not convinced by the argument that you would be able to create new banks with that money, either. The value of TARP is nowhere near the combined assets of the banks. It wouldnt really extend credit. There is some validity to the argument that toxic banks could have been created with the toxic assets of the banking sector. If it was handled in the appropriate way, it may work. That would perhaps lead to the need for mergers, though, and a second round of institutional reform later on down the road in order to increase competition and break up the huge new banks created from the first phase of reform.
I think a financial services tax is perhaps the least iniquitous way of dampening speculation. The derivatives market needs some way of being kept in check and I think it is far too large and complex for government to regulate it efficiently, so it may be the only solution.
I dont really see what fiat money has to do with Babylonian creation myths at all.