What would happen if banks weren’t bailed out?

Question

What would be actual consequences if banks (or other large companies) weren’t bailed out by the government. Would financial crashes be worse?

In: Economics

Answer 1

If the banks were not bailed out than vastly more people would have been laid off and lost their homes/futures. People, especially on the left, like to look at those bailouts as helping the wealthy. This is something the left uses as a hammer. The fact is though the bailouts were done to prevent the middle class from collapsing due to government rate hikes, which slows the economy and raises ARM mortgage rates.