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No Lehman Moments As Biggest Banks Deemed Too Big To Fail

Saturday, May 18, 2013 - 12:05 PM
There may be no government action more universally reviled in the U.S. than bank bailouts. Republicans and Democrats, financial industry lobbyists and watchdogs, Wall Street executives and President Obama say taxpayers should never again rescue a failing bank.

Investors, it turns out, don’t believe that, Bloomberg Markets magazine will report in its June issue. The people who lend money to the largest banks are betting that Uncle Sam will toss a lifeline to a giant should it stumble, according to a study by Deniz Anginer, a World Bank financial economist.

Bondholders who lend money to the six biggest U.S. banks are so convinced the government will bail out these institutions that they are willing to accept lower returns -- a marketplace subsidy worth $82 billion from 2009 through 2011, Anginer calculates. 

No Lehman Moments as Biggest Banks Deemed Too Big to Fail - Bloomberg
ShorebreakShorebreak2,696 posts since
Apr 6, 2010
Rep Points: 14,620
1. Saturday, May 18, 2013 - 12:49 PM

My Dear Shorebreak,

There may be no government action more universally reviled in the U.S. than bank bailouts.

I assume that you are referring to the bailout that was carried out under the autority of the  Republican Majority Congress and was approved by the signature of the President with Repblican party affiliation.  (Let me know if you are referring to some other bailout.  :-) )

If that's what it is then you're wrong on multiple counts.
  • The premise is wrong.  When the government saved the financial system, it prevented the US "depositors" from facing the fate that is currently faced by the Cypriot "depositors".  More appropriate way to describe the bank-bailout is "Saving the National Financial System",  "Saving the Depositors" or some such.
  • There is a government action that is more reviled than the bailout:  Invasion of Iraq.
  •  What is "universally reviled in the U.S."?  ... Universe is a bit bigger than the US - you know.  :-)
Yours Truly,
- Anon
In FED I Trust  :-)
ytytytytytytytyt158 posts since
Jan 28, 2013
Rep Points: 623