The major, serial bailouts of 2008 were not the result of some unelected, socialist technocrats hidden away in a government basement somewhere exploiting a loophole. They were the results of GOP-appointed Hank Paulson, GOP-appointed Sheila Bair and GOP-appointed Ben Bernanke, all with the support of a Bush White House-sponsored EESA going to Congress and asking that an emergency bill be passed to allow for TARP. If this all happens all over again, and it could, there’s nothing to stop the government from going to Congress and demanding more money for the financial system. Congress can always pass new laws in an emergency, even if it means overturning old laws. The only way to stop this is through prudential regulation on the front end, separating out business lines that need a set of Federal insurance and those that don’t, and a resolution mechanism that is earlier and reduces uncertainty on the backend.
The GOP is opposed to all this. They have already signaled to Wall Street that, starting the morning of November 3rd, 2010, the GOP will be the party that fights sensible Wall Street reform and returns us to the world of 2009, the world most favorable to Wall Street.