Money were made but not enough compared to the risk involved with lending them out. Thats the point.

The parent asserted that, but did not actually quantify the risk in any way. I could just as easily say that there was no risk at all since the government was obviously not going to allow those institutions to fail.

One way to infer: what's the risk of lending to a company that's facing an existential crisis, that's in such dire straits that no one else would lend to it?

The claim that I answered where "Money were made" it didn't quantify it either so I fail to see the point.

This ignores the risk of not lending them out, which is difficult to quantify, but is considered significantly greater than 0.

Not sure I understand. The difficulty of lending them out should just increases the risk of lending them out and therefore the need to recoup that risk by a proper margin.

Thats not what happened when the banks regardless of contracts still gave out large bonuses many times more than the return to the taxpayers.

That simply doesn't add up.

The risk of not lending the banks out is a depression where the currency / global economy may have lost more value.

Example: The gov only made 8.5%, but if the US costs have increased 16% over the same period (because of a depression), the overall return is more like 24.5%, ignoring the additional costs of a depression.

Bot possibly, even probably, enough compared to the risk involved with not lending them out (i.e. another depression).

You assume there's no other way to avoid a depression. The banks can be bypassed, even if that would be a bit unconventional.

Thats irrelevant to how you calculate what the return should be compared to the risk involved.

Why? Loss of tax revenue to the government resulting from a depression is certainly money that the government needs to factor into the calculation.

Because it's embracing too big to fail. Unless we want 'too big to fail' to be the rule going forward, and unfortunately it seems that it will be, we should reject the idea that the rest of us are the beneficiary of having to bail out the banks.

Whether we embraced it or not, it was part of the calculus. So was the fact that we'd need continued investment into the economy to work our way out of the financial collapse. That meant that options like nationalizing banks, which might drive investment overseas in the future, could have a direct negative economic impact that needed to be considered.

The total loss in tax revenue over the Great Recession period is measured in trillions.

http://2.bp.blogspot.com/-nkdzCkw8Rr0/U-qiPe1Tf-I/AAAAAAAARS...

I'd suggest that's a much more direct and obvious economic impact than some maybe-perhaps about driving investment overseas. (How, exactly? Do you think money would suddenly stampede out of the US if regulators developed a spine and jailed the delinquent operators who caused the crash?)

Anywway - clearly the decision was political. It was made for the benefit of the banker caste, and not for the general population.

The underlying problem is unearned privilege.

There's no rational reason for these bonuses. But bankers pay themselves these sums because they know they can, irrespective of the incredible damage they cause to the rest of the economy.

Sure, I agree that we had no choice at that point but to bail the banks out.

But when reviewing the decision afterwards, I think we need to reject lines of argument that the government did really great on the deal so it's not that bad what happened. We don't want it to happen again, we don't want to be in a no-other-options situation.

Sure but so is the danger of going bankrupt for the banks or being completely nationalized.

Also the country would survive a depression if it really came down to that, the bank wouldn't survive a bankruptcy.

So the playing field are fairly even when it comes to having leverage.

"Made."

> So, money was made?

I don't know the details of when the money was disbursed and when the money was recuperated, but if it were disbursed in 2008, and recouped in, say, 2014, there was a 10% rate of inflation, which devalues the currency to the point that no, money was not made.

If 2013, the rate of inflation was 8.2%, which leaves a .4% "profit", assuming no other costs.

If 2012, the rate of inflation was 6.6%, leaving a 2% profit, etc.

Of course, this assumes the money wouldn't have performed in any way just sitting in the government coffers, and I honestly don't know enough to even begin to evaluate whether it would have.

Inflation was 1.5-1.6%.

http://research.stlouisfed.org/fred2/data/CPIAUCSL.txt

edit: computation done by comparing Jan 1 2012 to Jan 1 2013, etc.

Between which dates? If I'm reading this correctly, Jan 08 to Jan 14 is 212 to 234, which is about 10%. (This also matches the statistic that I happen to have memorized of 8% inflation between 2010 and 2014.)