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What you're describing is exactly how tarp bailouts of 2008 worked - government bought preferred stock. It was then promptly bought back over the next couple o
by dmoy 7y ago
What you're describing is exactly how tarp bailouts of 2008 worked - government bought preferred stock. It was then promptly bought back over the next couple of years.
Truly getting rid of the mutualizing of risks would be letting the companies just collapse. But for various reasons (wanting banks, plane flights), we've decided to not do that.
- fra 7y agoI think if you severely dilute (or even wipe out) the shareholders you've gotten rid of the moral hazard. This happened with some of the car companies, and I don't think they're too eager to go through it again.