The G-20's decision in November 2008 not to let any systemically relevant bank perish may have seemed wise at the time, given the threat of a global financial meltdown.
But that decision, and bad policies by central banks and governments since then, has given over-indebted major banks the power to blackmail their rescuers — a power that they have used to create a financial system in which they are effectively exempt from liability.
Big banks' ability to extort such an arrangement stems from an implicit threat: The financial sector — and with it the economy's payment system — would collapse if a systemically important bank were ever pushed into insolvency.