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But if the bank fails, the bank owners get wiped out.

• gojomo 3y ago
  But banks keep using the leverage of gigantic – but not fully admitted/accounted-for – de facto government subsidies to make destructively-reckless bets out of proportion to the nominal "bank owners" capital-at-risk. So even if "the bank fails", there's been destructive speculative misallocation whose social costs can be far larger the nominal owners' losses. Of course, the government also doesn't let the "systemically important banks" fail - so related politically-mobbed up interests don't even get "wiped out".