Is everyone just glossing over the fact that the feds make a profit on bailing the banks out? Seems like a win win to take over ownership in the event of a bank failure.
Was this definitely not accounting trickery? Like even the way money is created is intentionally convoluted and approximately 1% of the population even attempts to understand it. Can we really trust the accounting of bank bailouts which stood to be unpopular when the accounting produced a convenient outcome? Has anyone plausible analyzed this to a convincing level of detail?
This was explained by Jon Stewart on The Daily Show ad neausum in 2008 and was common discourse for years after. No. It's not accounting trickery. Rather than allow the company aka the bank to go fully bankrupt the government simply forces a sale of the shares of the bank to the government. The original stock owners basically take a cap gains loss (potentially based on their cost basis). The bank then continues to operate as normal. This prevents a run on the bank and keeps it stable. Then 2-3 years later the stock recovers and the government sells its shares. Since they bought low this is highly profitable. Anyway yes and yes. The 2008 bailout ended up making a profit for tax payers. Thanks Obama.
If there was a reliable profit to be made, a third party would do it.
I suspect the real profit is made by also being in a position to adjust laws and rules to make sure your investment survives, as well as turning low rated bonds effectively into government bonds. All those things are at the expense of others in the bigger picture.
3rd parties don't have the capital to front the losses. That's the whole point for the government to do it. The feds get the advantage that they basically get to force the existing creditors to sell at a loss. Presumably that's what everyone here wants. The existing owners to pay a penalty on the failure and for everyone else to remain whole if possible. Well that's exactly how a bank "bail out" works. So what's the actual problem? The only one's "hurt" are the owners who miss managed the business.