Taxpayers on hook as some bailed-out firms prove frail
Taxpayers on hook as some bailed-out firms prove frail
A year ago, the financial system was tottering and government officials arranged a $2.3 billion emergency cash infusion into CIT Group, a troubled lender to small businesses.
Today, CIT is in bankruptcy court, and the taxpayers' investment is on the brink of being wiped out. It would be the largest loss so far from the government's massive rescue of the financial system, but it isn't likely to be the last.
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Analysts expect more bailed-out firms to fail in the months ahead. Others may survive but will struggle to repay the government. Steven Rattner, the former head of the government's efforts to bail out the auto industry, said recently that the full public investment in GM is unlikely to be repaid. Meanwhile, AIG is dismantling itself, selling healthy subsidiaries at what critics say are bargain prices in an all-out effort to get cash to repay the government.
Too Big To Fail is most profitable for banks that didn't need it apparently.
This is the problem with fascism instead of capitalism. Bailing out companies that don't work still mean that they don't work. Bailing out citizens is always a much better option because we support companies that are functional. Companies that should fail will fail with or without the bailout. What a waste of money.
This is why we must stop all bailouts unless it's to the people. It's mostly our taxes anyway, no?
To be fair, companies should only get bailouts proportional to their taxes (which is very small compared to what individuals pay). Companies fought for that right of minimal taxes and it is indeed their right to get minimal bailouts.
Here is another idea, why doesn't the government tax companies at an insanely higher rate to make them pay back the bailout cash? This rate would be equivalent to what individuals pay... companies have the same rights within the Constitution as individuals (some would argue more rights). If companies want to be equal to people then they should be treated as people completely. If they commit crimes, they (management) should go to jail, among other things. Is this unfair to management? Given what they are paid, no. Along with great rewards is great risk.