Kassz007
Registered: Jan 2009
Posts: 1120 |
11-03-09 07:28 PM
I'm not an expert on the subject, but I think it all comes down to confidence.
Suppose BAC was allowed to go bankrupt. Any amount above the insured limit by the FDIC, customers would lose that money. This would trigger an incredible loss of confidence in banks and the financial system in general, resulting in numerous bank runs etc. And we all know what happens at that point...
Also consider GM. Imagine the incredible shock to the economy if GM all of a sudden went bankrupt, and everyone employed by GM was suddenly unemployed. Again, this would trigger a trickle down effect whereby a loss of confidence in the economy in general would have a devestating effect on all sectors.
Again, I'm no expert so please comment if you disagree.
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