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Since this is becoming a recurring theme, of "too big to fail". I think, from now on, any company that is "too big to fail", should have to pay a "too big to f
by thorwasdfasdf 7y ago
Since this is becoming a recurring theme, of "too big to fail". I think, from now on, any company that is "too big to fail", should have to pay a "too big to fail" insurance tax to the government (perhaps a certain percentage of their revenue). they can't just keep getting free bail outs, without paying the insurance premium. If I opt to not get drivers insurance and then crash into someone, i can't just ask for insurance coverage after the fact.
- LatteLazy 7y agoIsn't that exactly what the bailout is? We lend them 100bn, they pay back 120bn, that's 20bn in to-big-to-fail insurance premiums...
- thorwasdfasdf 7y agowell, the premium they're paying is less than the market rate, otherwise the market would have given it to them. Hence, if they're going to get a subsidized loan, they should have to pay into that, along with everyone else that is elligble for it
- LatteLazy 7y agoThere is no market rate for this because it can only be provided by government and because these events are basically unique. The key here should be for the insurer (government) to recover a little more than their expenses in the medium term. That's a correctly priced insurance policy. That's exactly what tarp did. It's actually very impressive that the managers of the program were able to price the policy so correctly if you think about it...
- thoughtstheseus 7y agoCheck out: Systemically important financial institutions