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What losses are being socialized? This is a liquidity issue that is being reconciled with short term loans, not a solvency issue being bailed out with tax dolla

• sanderjd 4y ago
  So I don't know for sure, but my intuition is that if this were a great deal with no losses, there would have been a private solution. The socialization of the losses is the mechanism where any losses that do happen will be passed on to other banks, who will pass that on in some way. I am certainly glad it isn't taxpayer funds, but it's not a free lunch.
  • sajacy 4y ago
    Your comment really amused me. "Hold on, let me just... I'm sure there's a Good Reason around here somewhere..." - Hot Take Taylor
    • yunwal 4y ago
      The onus is on the people claiming that this is a no-risk deal for the FDIC. Otherwise, seeing this as a bailout is the reasonable conclusion. If there was no risk, JP Morgan would be willing to step in to capitalize. The fact that they won’t tells me this is a bailout.
    • sanderjd 4y ago
      I mean, they spent the weekend trying to find a private buyer and clearly nobody wanted it. Doesn't seem to be a reach to conclude it might not actually be a great deal for the new owners (the US government)...