That would be the lender. What is wrong with a greedy or stupid lender sharing in the losses? This will make future lending much more conservative, which seems not very bad.[/quote]
If the lenders were all private, and got no govt support when loans went bad, then the lenders would indeed be learning from taking losses. Most of the money being loaned today either comes directly from the govt, or is backstopped by it, so the lessons are not being learned, and the taxpayers are picking up the tab (until inflation can be ignited, when conservative savers will start sharing the tab).
