How does a bank bailout work? Where does the money go exactly? What causes banks to fail in the first place?

Politicians give taxpayer money to failing banks. Then banks use some of that money to pay off politicians. Banks fail because they know any reckless behavior will be alright when the government has their back.

Banks have reserve ratios. I think it's around 5-10 %....meaning for every $1 dollar they loan out, they have to have the reserve amount in the banks (in this case 5-10 cents). The banks lent out LOTS AND LOTS of money via housing loans over past decade or so. The houses were overpriced and millions of people started defaulting (mainly because houses started getting treated like investments.......which is why the home loans were bundled and then resold). The banks were not anticipating millions of people defaulting at once. So suddenly, all these home loans (which are counted as assets until the person doesn't pay them back), suddenly became worthless (aka TOXIC assets). The government essentially took tax payer money and bought the TOXIC ASSETS (aka worthless) so that the banks could take them off their books (otherwise many of the banks would have become insolvent and unable to operate).