The banks did exactly this before the financial crisis, and most of them came out of it just fine.
The reason this works in practice is because when a company becomes that big, it's impossible to place blame. Any repercussions against the company as a whole will mostly impact the honest and innocent folks.
I would think it's less about diffusion of blame and more about your last sentence there -- that the big guy can play the game of mutually-assured destruction. They warn of all the collateral damage from having to pay for what they did, and the public is too willing to believe it and/or too unwilling to endure the short-term pain of enforcing the rules.
It is certainly not impossible to place blame on indivudals. After the savings and loan crisis, hundreds of execs were rightly blamed, indicted, convicted, and went to prison. This time around, the criminals have bought off the watchdogs - nobody went to prison. Instead they get off with a fine and no admission of wrongdoing, and they live to do it again another day.
The reason this works in practice is because when a company becomes that big, it's impossible to place blame. Any repercussions against the company as a whole will mostly impact the honest and innocent folks.