The claim of the article is more that current government policy has not correctly priced in the externalities caused by most mortgage funds ultimately being available through bonds rather than through bank deposits. "The public would have to foot the bill, of around $400 billion, making explicit the contingent liability for future losses that it already bears. The cost of mortgages, at a record low today, would also rise. But that would eliminate the ongoing hidden subsidy and create a level playing field so that private firms were able to do more mortgage lending. If that bill was too big to swallow, a second-best would be to impose the new rules on new mortgages, leaving the stock of subsidised existing loans to run down over the coming decades." Thanks, by the way, for linking to the Bloomberg article, about a different issue, but a good source in general for comments about economic policy.