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"The government bailed out Detroit, why's this any different?" Here are some differences: - The bank bailouts are turning out to be at least a 100 times as ex
by hristov 17y ago
"The government bailed out Detroit, why's this any different?"
Here are some differences:
- The bank bailouts are turning out to be at least a 100 times as expensive as the Detroit bailout. Detroit is not even worth mentioning in the same breadth as the banks.
- In the detroit bailout, most people that were responsible for the failure did not benefit. CEOs were sacked, all equity holders lost their money, debt holders lost most of their money too. In the bank case most people responsible kept their jobs and many of them are now back to getting multi million dollar bonuses (supported by government loans). Some banks wiped out their equity holders, some banks had only temporary drops in stock price. But pretty much all of the bank debt was guaranteed by the government.
- ericd 17y agoCan you and others please stop implying that people are getting paid bonuses directly out of taxpayer money/loans? It's completely false.
- hristov 17y agoThey are getting bonuses because of the loans. The issue whether they are getting the money directly out of the loans or not is impossible to decide because once the bank gets the money it treats it like any other money. But if the loans did not exist, many of these people would not be getting these bonuses either because their employers would not exist either, or because their employers would not have sufficient capital to generate the profits from which the bonuses come.
- ericd 17y agoNo, it's not impossible, they've paid back the loans, so it's not coming out of that money, period. Goldman in particular: a) didn't want the money, they were forced to take it b) paid it back as soon as they were allowed So yes, they would have gotten those bonuses regardless, and no, you can't say they would have failed without it.
- hristov 17y agoThis has been covered million time before, but even though Goldman repaid the tarp loans, they are still getting loans through the fed since they decided to buy a consumer bank for that exact purpose. Also, the bailout of AIG was really a bailout of Goldman. In other words, AIG got bailed out so that they could pay Goldman their enormous losses on securities that they bought from Goldman.
- ericd 17y agoThe bailout of AIG helped quite a few others as well. Know of any good reading on the consumer bank point?