Last resort: the financial crisis and the future of bailouts

The bailouts during the recent financial crisis enraged the public.

They felt unfair - and counterproductive: people who take risks must be allowed to fail.

If we reward firms that make irresponsible investments, costing taxpayers billions of dollars, aren't we encouraging them to continue to act irresponsibly, setting the stage for future crises? And beyond the ethics of it was the question of whether the government even had the authority to bail out failing firms like Bear Stearns and AIG.