I work in the industry and can say this: It's a very complicated issue that many universities are dealing with, and unfortunately there are no easy answers.
On one hand, you have the fact that many, many alumni of Greek-heavy schools very closely connect their experiences with their houses to their experiences at the university. To them, it was a fundamental part of their college years, and in truth their loyalty to the school is in large part based on their loyalty to their houses. Which makes sense, as the house provided the very basis of their entire social life at the school. There is a lot of good in the system, including the commitment to service, etc., and universities are wary to act too harshly against the system because of fear of backlash from some of their most engaged alums. I think even critics of Greek life would admit that, for those who are part of it, it can really be a great thing.
On the other hand, the stats are what they are: the houses do generally seem to have higher instances of problem behavior -- dangerous drinking, sexual assault, hazing -- than can be found elsewhere. And that's why universities don't have any choice but to act.
I don't think anyone would honestly suggest that the drinking isn't a problem across the entire Penn State student population -- it clearly is -- and while you can do everything you can to educate kids about problem drinking, the reality is that they are adults and they are going to make their own decisions. As institutions you can only hope that when a kid really is in trouble, his/her friends will step up and make sure they get the medical care they need. Again, that goes to education and communication between the schools and the students, with the institution making clear that everyone's safety -- not "busting" parties or citing kids -- is the top priority. Trust has to be established for it to work.
But let's put drinking along to the side for a moment. Drinking is going to happen, we all know that. It's just a matter of managing it as best as possible and keep the kids as safe as possible.
The issue that I think really puts a target on the Greek system is hazing. And that's precisely because hazing and drinking is an awful combination that leads to terrible circumstances. Whatever the reasons why hazing continues to linger, whatever traditions are part of every chapter's history, etc. -- I think the time has come to wake up and realize that it's got to end, or more kids are going to end up sick, injured or dead. It's a very simple equation--a bunch of drunk brothers (still young adults, prone to dumb decisions) hazing a bunch of younger kids who may or may not know their limit, in a culture where binge drinking and hazing is just accepted, is a serious problem, and an entirely unnecessary one.
I don't think there's a chance of the Greek system ever going away at Penn State. It's too entrenched. But the system needs to wake up and really embrace fundamental change, or the pressure on them will simply never go away. Alumni need to back the changes. Parents do, too.