These toxic assets weren’t sold like you would sell a car - they were sold with strings attached, which are now pulling. The assets were insured by the sellers against, for instance, fraud. Otherwise the British banks would not have brought them.
The toxic mortgage assets are legally-binding contracts, and the British banks read the fine print.
I understand that but their contracts were not with the US government. The US government doesn’t need to be on the hook for other parties contracts unless we, the US, represented that we would guarantee those financial instruments.
That’s why we have let these companies fail. The holders of the worthless paper can go after the bankrupt companies and the taxpayer will have dodged that bullet.