In most western countries the Govt only guarantees up to a certain amount per depositor (in US it is $250k).
The ballad of Silicon Valley Bank is a good example of why the Govts needed to bail out their banks during GFC. Without the govt backing those banks there would have seen huge runs, and in no time at all the imaginary money banks operate on would have disappeared, meaning companies can’t pay workers, people can’t buy groceries etc.
Note, I am not defending the heinous behaviour of finance execs leading up to, during and post GFC - for them I’d bring back the guillotine. But rather explaining that bailouts are needed sometimes to ensure the economy keeps ‘flowing’. Post GFC has seen a lot of countries bring in tighter regulations for banks with regards to how much cash on hand they must have, how much in investments/bonds and how much exposure to loans they are allowed. Unfortunately I’m not sure if US took the opportunity to propose and enforce new regulations as many other nations did.
The government could have bought out the failed banks and nationalized them.
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we don’t have national federally owned banks available to the public, or at least any that I’m aware of.
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So your idea is just pray for some rich people to buy the assets and not let the bank’s customers without all their money?
What if this pray for the rich saviors is not answered? Any plan b? Maybe make this buying a law?
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In most western countries the Govt only guarantees up to a certain amount per depositor (in US it is $250k).
The ballad of Silicon Valley Bank is a good example of why the Govts needed to bail out their banks during GFC. Without the govt backing those banks there would have seen huge runs, and in no time at all the imaginary money banks operate on would have disappeared, meaning companies can’t pay workers, people can’t buy groceries etc.
Note, I am not defending the heinous behaviour of finance execs leading up to, during and post GFC - for them I’d bring back the guillotine. But rather explaining that bailouts are needed sometimes to ensure the economy keeps ‘flowing’. Post GFC has seen a lot of countries bring in tighter regulations for banks with regards to how much cash on hand they must have, how much in investments/bonds and how much exposure to loans they are allowed. Unfortunately I’m not sure if US took the opportunity to propose and enforce new regulations as many other nations did.
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