Quote:
Originally Posted by Dcat
Regardless of size, I think that ANY and ALL banks that are no longer competitive, or that involve themselves in highly risky behavior should be permitted to fail. When that is allowed to happen, it purges the poor performers from the market so that leaner, better run banks can emerge. Yes, jobs are lost, but I think it's better to quickly cut the losers free than it is to continue with the misguided idea that propping them up and delaying the inevitable will somehow be better.  |
In almost every case I would fully agree with this. However, with this case the widespread use of sub-primes and bad derivatives (so called toxic assets) was so widespread that if they let every bank that fell victim to them crash and burn it could easily start the house of cards failing and could lead us into a depression.
Of course there is no guarantee that we won't eventually end up there anyway and all these bailouts and stimulus stuff is just prolonging the inevitable, but I think this particular case the bailouts were meant to help us avoid a full on collapse of the economy.
Right now a few good banks are getting screwed because they didn't get help, didn't do anything stupid and are having trouble surviving. If we let all the big banks fail, most of those little banks would follow suit and crash right behind them.