Quote:
Originally Posted by TheMercenary
If we would have allowed that to happen the weak ones would have just filed for bankruptcy or outright failed. That would be true leveling.
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Failure of some banks were discovered (after the fact) to be so deeply embedded into this nation's economy as to require bailouts. One that should have never been rescued is GMAC.
How did GM keep selling cars that would otherwise never sell - to avoid bankruptcy? GM mortgaged another asset - GMAC. Zero percent financing was the mortgaging of GMAC. In addition to the $60billion given to GM, the Feds also gave GMAC something like $12billion. More 'backdoor' corporate welfare to GM. Private investors who took a 50% stake in GMAC after GM so deeply mortgaged that bank should have taken a loss. Those private investors should have done due diligence - and did not. Therefore should have lost their shirt.
GMAC is example of one bank that should never have been bailed out. But, in the fear and turmoil created in almost entirely in a month by almost a decade of fiscal mismanagement, GMAC was one of the lucky ones that got saved - and shouldn't. In that month, few had time to do sufficient research.
GMAC was not necessary to this nation's economic survival. GMAC was how GM corporate management saved their jobs and reaped massive bonuses at the expense of every American.
A problem that could have been avert years or even decades ago if so many Americans did not buy what was so obviously crap. Had the problem been forced upon GM early enough (because consumers stopped buying crap that needed two extra pistons to get the same horsepower), then bankruptcy (even in 1991) could have averted this problem. Bankruptcy applied early only eliminates what creates 85% of all problems - in this case GM management.
GMAC is probably one bank that should have been bankrupt - then sold to more responsible management for pennies. Unfortunately, GMAC got saved when the only solution to complete economic freeze was more oil – massive liquidity.