Didn’t some of these companies cause the crash? Or at least help it. Feels kind of unfair that they get off scot-free.
What would have happened if the government didn’t bail them out? Would we ever recover?
In: Economics
The tl;dr is the banks that were going to fail were so large that insolvency would cause other banks to become insolvent. They owned “toxic assets” with hugely inflated price that would have had to been sold. This would have created a domino affect in the market and basically every bank would have failed.
Imagine you wake up tomorrow and not only is every investment fund locked – everyone’s bank accounts are unreachable as well.
That’s what was likely to happen if we didn’t give them loans to shore up their books.
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