If it's wrong when the government gets into the health insurance business*, why it is right when the government gets into the financial insurance business? Surely, physical health is as important as financial health?
Never mind.
*Of course, government is already in the health insurance business in a really big way to begin with.
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I don't see what's inconsistent about the position.
Health: "We don't think that we should be involved in anything that might prevent an expensive health disaster. Go to the emergency room and we'll socialize the cost because everybody agrees that we can't let you die once you're there."
Banking: "We don't think that we should be involved in regulating financial instruments that could disrupt the entire financial system. Cash in hundreds of billions (minimum) in bailout money once the meltdown gets to the point where everybody agrees that we can't afford to ignore it, and we'll socialize the cost."
Totally consistent. Just remember, they're "credit default swaps" and not "insurance" because insurance is regulated. The difference? Insurance is regulated.
I suspect the US government doesn't really want to be in the financial insurance business. The reason they've got involved is the same reason they run the CDC - if they didn't, things would be screwed up even worse.
Remember Katrina? The insurance companies went to court pre-emptively for judgements that limited their liability. Why? Because full payouts would ruin them. How could that happen? Because insurance companies do not insure themselves against catastrophic losses, as that would be a wasteful business practice.
In gambling, bookies lay off risk so they don't get clobbered by some upset. The insurance racket has no need of that because they've got judges in their pockets.