The government-arranged and subsidized absorption of Bear Stearns into JPMorgan Chase draws attention to two additional features of the too-big-to-fail problem. First, no matter what its general economic policy principles, a government faced with the possibility of a cascading financial crisis that could bring down its national economy tends to err on the side of intervention.
Second, once a government has obviously extended the reach of its safety net, moral hazard problems are compounded, as market actors may expect similarly situated firms to be rescued in the future.