3 ms·

This is a horrible idea. Banks that operate based on the whims of the public are going to invest in stupid but popular projects that are doomed to fail. Popular

This is a horrible idea. Banks that operate based on the whims of the public are going to invest in stupid but popular projects that are doomed to fail. Popular ideas align poorly with financially-sensible ideas. Banks don't want to fund public housing and other social programs because they are risky and will probably lose money. A city like San Francisco is going to fund feel-good measures that are doomed to fail. Then they're just going to need to be bailed out, and the taxpayers are going to suffer.

wwweston 7y ago
On the other hand, banks that operate in private are likely to invest in stupid and unpopular projects that are doomed to fail. Of course, in theory, private banks have incentives not to invest in projects doomed to fail, and the invariably upright careful professionals staffing them have similarly aligned incentives. Which is why we can't think of any high profile examples of private banks needing to be bailed out by taxpayers, right?
- adventured 7y ago
  > Which is why we can't think of any high profile examples of private banks needing to be bailed out by taxpayers, right? Which says nothing about whether the frequency of bailouts would be much higher or not if all banks were government owned & operated. As bad as TARP was - while still earning a profit for the government - the government bank scenario may have been even worse. You can see examples in this thread of the incompetence of government banking in Europe, in Germany for example. If the Germans can't operate a government bank at a superior level, California's government would be an epic disaster.