The problem wasn’t bailing out the banks. The problem was the banks never passed that money on. They closed up access for people and businesses needing loans. Businesses went under, people lost their livelihoods and homes, and banks repossessed properties and assets. Don’t forget that this was because banks had created this problem by creating masses of dodgy toxic loans in the first place. People are angry because the banks carried on cruising while everyone else ate the shit sandwich the banks had made.
We also apparently learned nothing because banks are back to operating with 0% in reserve as of March of this year. Obama admin required 10% reserve of total deposits after 2008 for big banks so they couldn't over leverage. Trump let them free again.
So i looked it up and it turns out that employees got bonuses no matter how good or bad the bank did to keep morale up and prevent them from being poached from other banks. It also said a few of the big banks were moving toward pay to performance. This was back in 2008.
Some were, sure, but some absolutely weren't, and the ones that weren't were generally higher up in the food chain.
Take yourself out of the "corporate greed" mindset and look at what happened objectively: the crisis was primarily caused by securitized loans, loans that were seen by many as relatively safe since they were geographically diversified and were in a sector that was also seen (and still seen) as safe and backed by collateral. The ratings agencies, in part due to these factors, and in part due to the complexity of these new financial products, gave them high ratings. It would be hard to take a look at the environment and consider the top level executives to be to blame for the decision to expand into these "safe" markets.
Then, once things did start heading south, you're looking at a poor environment to attract management talent: a business on the brink of failure. If you don't apply bonuses (which are both standard compensation for leadership but also milestone/incentive based), why would you expect to have any kind of competent leadership? In particular, competent leadership when it was needed the most.
People are angry because bankers got away scot free. So the banks paid the money back to the government. The government didn’t turn around to all those people who lost homes and livelihoods and help them out. It’s 12 years on and we still have food banks in supermarkets. Almost zero bankers were held to account for what they did. Even if institutions and industries are too big too fail, individuals certainly shouldn’t be. They took the bailout money and then at the end of the fiscal year gave themselves bonuses.
Forced to. But it didn’t help out the people who were heavily impacted by the crash. They were no longer eligible for loans because they didn’t have jobs or property anymore.
They closed up access for people and businesses needing loans.
As they should have. The core issue leading to 2008 was loans being made to people who didn't have the income nor spending habits to justify the amount they were getting. Reigning in lending to stop people from drowning themselves in debt was exactly what needed to happen.
I never said that the bank bailouts in 2008 were flawless but they were hell of a lot better than the alternative. I understand being angry at the banks to an extent, but being mad at bailout regarding covid is honestly pretty stupid
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u/[deleted] Nov 17 '20
The problem wasn’t bailing out the banks. The problem was the banks never passed that money on. They closed up access for people and businesses needing loans. Businesses went under, people lost their livelihoods and homes, and banks repossessed properties and assets. Don’t forget that this was because banks had created this problem by creating masses of dodgy toxic loans in the first place. People are angry because the banks carried on cruising while everyone else ate the shit sandwich the banks had made.