Amid the wreckage of the 2008 financial crisis and the ensuing “Great Recession,” there was one conclusion that everybody could seemingly agree upon: Taxpayers should never again be forced to cover the failed bets of the nation’s biggest banks.
Nine years later, the steady campaign of lobbying and influence-peddling by those same “too-big-to-fail” institutions has had a powerful effect. In fact, it appears to have given policymakers who once spoke loudly about protecting taxpayers from future bailouts a serious case of amnesia.
Consider several of the mortgage market “reform” proposals that legislators and some former government bureaucrats have offered in recent years. Surprisingly, almost all of them would require that taxpayers shoulder the costs of any future mortgage market crisis by providing an explicit government guarantee to trillions of dollars in qualified residential mortgage-backed securities.