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Comment by soperj | Hacker News Reader

> 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.

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There will be a lineup of people from all areas of the economy and academia that will argue persuasively that if the banks fail the economy will collapse.

And then a taxpayer-funded bailout.

FWIW the banks ultimately paid it back with interest. Whether Biden's administration and this government can manage an outcome like President Obama and the people we had in power then did is an open question.

We're still 245 B $ short overall.

With “a little” interest, not at all commensurate with the risk taxpayers took on with the bailout investment

> 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...

The economy collapsed during the Great Recession and middle to lower class suffered the most. I think there might be a big movement to push against another bank bailout this time around...

The middle and lower class benefited greatly from the 1920s run-up. They benefited far less from the last decade of economic growth that went pretty much wholly to asset owners and they don't own many assets.

They may very well decide to let it crash this time.

And they would probably be right

At some point these banks need to be held accountable for being a moral hazard. Main Street already bailed them out once for their risky behavior. We do not want to do this again.

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".

Just pointing out that the top 10% or so of earners pay around 75% of the income tax. So suggesting Main Street as the one who did the significant lifting in the bank bailouts is a bit weird unless you consider millionaires and billionaires part of Main Street.

When main street pays for it by losing their job, homes, and ruining their credit... then yeah, I would say main street paid for it.

The banks should never be bailed out. If a bailout is considered necessary, then it should be depositors who are bailed out.

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.

You're not bailing out the bankers, you're bailing out the companies with money in the bank.

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.

> 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

Silvergate bank failed recently too, before SVB. They were another crypto startup favorite. I feel like more are coming.

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