Scott Sumner looks at the numbers: it wasn't the banks that were too big to fail

It was the government:

So here are the eventual taxpayer losses we are looking at:

Fannie and Freddie — $165 billion and rising

FDIC — Over $100 billion

FHA — Who knows, even today they’re still encouraging new sub-prime loans.

AIG — $0

The big banks — negative $7 billion

Would it be fair to say that the initial reporting of the crash of 2008 was a bit misleading? The reporting that led most people to form indelible opinions that they will probably never re-visit or re-evaluate?

Some will argue that the Fed policy of buying MBSs indirectly helped the big banks. Maybe so, but if we are talking about indirect effects from government programs, then what about the indirect effects of the Fed letting NGDP fall 8% below trend in 2008-09? That hurt banks far more than any Fed MBS purchases helped them.