I get why a bailout can be important for the economy but I don’t get why the company just gets the money. Seems like tax payer money essentially is “buying” the company to me but they get nothing out of it.
Edit: whoa i woke up to a lot of messages! Some context to my question is that I am not from the US myself but I see bailout stuff in the news and as I understand it, the idea of capitalism is understood that “if you succeed then you make money and if you fail you go bankrupt and fold or get bought out” hence me wondering why bailouts are essentially free money to a company to survive which in my head sounds like its not really fair because not all companies are offered that luxury.
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>why is it not owned by the public now?
It depends on the type of bailout. It’s often a loan (that must be paid back), or a purchase of shares (which the government later sells, hopefully at a profit). Very rarely is it no-strings attached.
>Seems like tax payer money essentially is “buying” the company to me but they get nothing out of it.
Inaccurate. For example, in 2008 under the TARP program, in addition to an emergency loan, the US government bought $45B worth of preferred stock in Citigroup, a larger bailout than any other recipient in the $400B+ program.
When the government sold its stake, they had made a $12B in profit on Citigroup. Part of an overall $15B in profit from the whole program.
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