Washington Mutual wasn't just a large bank failure, but it was also one of a large number of other banks that failed at the same time.
During that time, a lot of other huge financial institutions were bailed out "under the table", and were not allowed to fail. Sometime by buying their crappy assets, sometime by rescuing their counterparties (e.g. AIG).
Let's hope SVB is not the start of a large wave of failures.
What is the main consequence of this? Maybe we don't bail out the bankers this time? Like it's just over a decade, maybe they should be allowed to fail.
> Unfortunately, the return paid on TARP did not keep pace with these private returns. Thus, taxpayers ended up subsidizing banks, and hence the narrative that “banks paid every penny of TARP with interest” is a bit misleading and certainly incomplete.
> But the gains from the recovery were captured disproportionately by the recipient banks. Hence a nuanced interpretation of our results is that the TARP return was less-than-fair for the risk it imposed on the taxpayers, and the banks ended up getting a subsidy to the tunes of billions of dollars in the process.
https://news.umich.edu/bailout-of-financial-sector-during-gr...
They may very well decide to let it crash this time.
If the economy "collapses" then so be it. This is the will of the "free market" that has been touted so much by bank lobbyists and other "libertarians".
The consequence is that otherwise healthy companies using the bank can't make payroll, pay their vendors or their rent - which has cascading effects.
Worth noting the Treasury made a profit on the last bailout to the tune of ~$10 billion.
Absolutely untrue. the return on TARP funds was wildly below market returns so unadjusted numbers on paper look like “oh great a $10bil profit!”
That’s like saying your savings account grew because the bank payed you 0.01% interest, while inflation ate 9% of your real value
The FDIC should take over the bank. Stock holders and lenders (not depositors) should be wiped out. Upper management should be replaced with competent conservative management, and criminal referrals should be made if warranted.
This was supposed to be the standard operating procedure, but instead, corrupt institutions and management were bailed out, to the detriment of the public.