Nobody ends up on the hook. The Fed is a large enough entity that it can step in and prevent the tragedy of the commons that occurs when individual banks start

Nobody ends up on the hook. The Fed is a large enough entity that it can step in and prevent the tragedy of the commons that occurs when individual banks start failing and people start making bank runs. This is how the federal government made money off the bailouts. Well this and basically looting Fannie Mae and Freddie Mac.