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Originally Posted by aceventura3
First, there is a difference between demand deposit accounts (checking/savings) and investments made by financial institutions. Not all the institution you list had the same problem, so I don't know what you want me to address. In some cases investment banks were highly leveraged using investors money seeking high returns using collateralize mortgage agreements. This almost had nothing to do with normal banking operations. With the housing bubble bursting the underlying value supporting these agreements made some of them worthless. On the other side of these transactions some made profits. The problem became liquidity in the system and that is what Congress tried to address. However, if the pain of re-valuing real-estate is going to be felt, you can delay it but you can not make it go away. The original TARP legislation was a joke in the fact that anyone thought it would have a real impact on liquidity in our banking system.
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Yes I meant checking/savings. Considering the size of the bailout, I suspect most of the banks I listed were in serious trouble. Citi, by all rights, should be dead. BofA may have died, too. Still, even if those banks failed and the check/savings were paid by the FDIC, do you think that could have even slowed what we're heading into now? I'm not being facetious, btw.