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Banks like JP and GS did not really need this money.
Actually the USA made out like bandits on this because of the interest payments we received. Again, blame your congress for not filling you in on CITI and all that. Do you know how much we made off of GS?
They paid it back + interest, so the treasury got extra money back from it's original cost to the tax payer. That extra money will go towards paying for schools/police/roads/defense, etc.. it's tax dollars, now.
again, though, this is a failure of the market and private business; it has nothing to do with the fed.
The agencies that rated the mortgage securities triple-A are private businesses that operate in the free market, so are the businesses that helped make the loans, provided the insurance on the loans, invested in the securities, etc. It was all the "Free market," which was suppose to be smart enough to see this coming and not let it happen... but they didn't.
I can't explain the failure of the market, other than to say that the market is not infallible, does not account for externalities
and that there is plenty to be outraged about, but the Federal Reserve shouldn't even be on the list, as they really didn't do anything to cause this to happen.
If you do not think it is efficient you should try to program some risk adjusted cross currency/security arbitrage programs. Let me know how far you get.
Sorry relating to do you think us gov. should prop up a big bank failure..
If we would have propped up Lehman Bros. you would have a different outlook. Paulson messed up there IMO as many other financial professionals feel the same way that I have spoken to.
It is not ideal, but it is better than having no electricity for a fortnight or two and catching fish in the pond for food. All of you guys calling for devastation couldn't handle winter without heat either I am guessing. Most do not understand what they are calling for. Most Americans are straight up idiots though, prob. the same way in most other countries as well.