What if, as a condition of bailing them out, we required all of their state elected officials and pension officers to resign and prohibited them from ever holding a position of influence over public policy again? I'm sure there are constitutional and legal questions about whether the feds can do that. On the other hand, Congress could tell them to go jump in the lake, a sentiment that should resonate with more than a few of the new Republicans. We'd probably lose a few good legislators, but, IMO, the price would be worth it.
We could also force the state legislators to stand trial for fiscal malfeasance, and their voting records should be evidence enough to convict a large majority.