The whole point of Bitcoin is that you don't need to trust third parties with your money. Pointing out that people who choose to give their coins to a third party might lose them seems trivial - yes, financial institutions collapse (if you can call something like flexcoin an institution), and yes, regulation and deposit insurance can help address that. Who was arguing otherwise?
The arguments for Bitcoin are that you don't / shouldn't need anything like Flexcoin in the first place. Apparently though, some people end up buying Bitcoins and then not storing them in their own wallets, ensuring they get the worst of all worlds - no low-trust technology and no government bailouts.
