It's also how the bank bailouts were structured. They weren't free money. They were loans plus government ownership (which the government typically sold off for

It's also how the bank bailouts were structured. They weren't free money. They were loans plus government ownership (which the government typically sold off for a nice profit). The loans were typically 5% which would rise to 9% after the first five years. People talk about the bailouts like they were free money and say things like "the government should bail out ordinary people." The reality is that they weren't favorable terms - but reasonable enough that the banks wouldn't fight taking the money. The government wanted to stabilize the banking system (and automakers) and it wasn't totally clear who would need money. For example, how much money do you need over the next month? Well, that depends on factors you don't know about. Maybe you have a medical emergency or some other unexpected thing happen. So the government wanted the banks to accept the money rather than say "nah, we think we can weather the storm" and then fail creating more chaos. If the government had said "we'll give you $10 and own half your company," no bank would have accepted that. Instead, it was typically structured as preferred shares (essentially a loan) offering 5% interest for the first 5 years and 9% after that plus warrants for ownership of the companies equivalent to 15% of the money invested. When the financial system stabilized, the banks typically repaid the loans and bought the warrants from the government. For example, with Citibank, the government gave them $45B and made a $12B profit 2 years later - a 27% increase over 2 years. That's pretty good. With General Motors, the government gave them $13.4B in exchange for $2.1B in preferred shares and 61% ownership of the company. People act like they got free money, but that simply wasn't the case. The government got a reasonable deal on that money, especially given that they were trying to force the banks to accept it. Some believed that they could go without the help and that the "bailout" terms weren't in their best interest. They didn't want to make a deal while their value was low since the government would be getting a lot for their buck. But the government's terms were reasonable enough that some cajoling got them to accept it. I mean, Citigroup went from $900B in July 2007 to $400B in July 2008 to $50B in January 2009 (and around $85B when the government sold its ownership in 2010). Citi did need the bailout and the US government ended up with 36% ownership. Citi clearly wouldn't have sold 100% of the company to the government for $5B in 2008 or 2009. At that point, you might as well roll the dice and take your chances. The government gave Citi $45B and got $22.2B back as cash from Citi and 36% of the company (basically, 36% of Citi for $22.8B). Note: when you buy large chunks of companies, you don't get the market price. As you buy more shares, you get to investors unwilling to sell at that price and the price goes up. Maybe 1% of shareholders might be willing to sell at $50B, but then some will believe they should hold rather than sell. So the government didn't get a bad deal.