Quote:
Originally Posted by Tempest
Really? I thought the banks took the money and still didn't loan it out forcing Obama to try and spend even more money to get things moving.
|
Yes, I thinks that's close, although I don't think it was because they all of a sudden realized the banks were not going to loan the money the way they envisioned, but rather they believed that fiscal stimulus was needed along side monetary policy [and bailout].
But I also think you are confusing two issues... there is a difference between injecting capital into the system to stave off systemic credit collapse and the idea that this capital would be lent according to their vision.
As far as I know, the major banks who received capital injections have repaid these loans, and in the case of Citibank, the FED sold it's equity stake for a 12 billion dollar profit.
I have not followed all of the assets acquired by the FED to see if they have completely divested themselves of stakes in the likes of GM and AIG, and I imagine the answer is no; and that taxpayers will not be as lucky in some of these as they were with Citi.
That said, I stand by the statement that without the "bailout" the frozen credit markets would have not recovered on their own (without intervening collapse) and the countries and companies that woke up to find they could not borrow to fund their day-to-day operations would have collapsed as a result. IOW, it would not just have been over leveraged investment banks, an insurance company (AIG) and financial institutions that took a shit.
.