01-10-2016, 05:54 PM
(01-10-2016, 01:41 PM)fredtoast Wrote: Bernie was not the one who came up with the phrase "too big to fail".
And that phrase is pretty awful.
For starters, the first two bulge bracket banks WERE allowed to fail - Bear and Lehman. It was only industry-wide contagion and frozen credit markets that forced the Fed to step in. And the taxpayer made money on those bailouts.
Chrysler has been bailed out before, and both time the govt made money. Same with GM, when you include the costs to the taxpayer of letting them go under. But in those cases it was less about "too big to fail" and more about a battered economy not able to absorb that.
Airlines are pretty big and they go bankrupt all the time. Enron and Worldcom were huge bankruptcies. The Fed can't step up in extreme scenarios as the lender of last resort without having, you know, companies to lend to.
