Would a bailout that took place almost thirty years ago under.

Would a bailout that took place almost thirty years ago under a set of different circumstances a valid reason to deny government assistance to a company? What other criteria other than "being bailed out before", should weight on whether the government intervenes or not?
Anonymous User
Anonymous User
Asked Mar 19, 2012
Sounds like a question about Chrysler Corp.

Federal financial assistance to a private enterprise has to be based on law. What constitutes a "valid reason" is up to the people in Congress when they decide on whether to offer the help or not. In the cases of the automakers, the decisions, both in 1979 and 2008 were based on jobs. They employed so many people that the country couldn't afford to lose all of the jobs a bankruptcy would erase.

In the recent cases of the financials, they were considered, "too big to fail" because of huge chunk of the country's invested retirement funds would have been lost. AIG, an insurance business, was included because they were insuring investments against default world-wide through instruments called, Credit Default Swaps (CDS). The consequences of their bankruptcy would have been just as disastrous.

What weighs most heavily on bailout decisions are the consequences of not acting. No politician wants to take the heat for possibly creating another depression so they cave in and bail them out. The answer, in my view, is not about denying help, it's don't allow any business to grow to a size they become "too big to fail." Above the failure limit, I would require they pay a prohibitive tax to cover the cost of a bailout.

But so far, nothing's changed since 2008. The situation remains, capitalize the profits and socialize the losses.

Rob
Answered Mar 19, 2012
Edited Mar 19, 2012

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