On the other hand, Andrew Jackson nearly brought about the collapse of the Second Bank of the United States when he refused to deposit tax revenues in it. The collapse of the bank was an important cause of the Panic of 1837 in which the next president, Martin van Buren, refused to involve the government. This event was a harbringer of the Great Depression.
Thus far, the score is 1-1.
The next disaster was in savings and loans during the 1980s and 1990s. The crisis was caused by institutions lending good money after bad, then getting slammed by rising interest rates. Fraud was also a big factor. The government set up the Resolution Trust Corporation (RTC) to regulate hundreds of failed S&Ls and try to sell their assets. The taxpayers received back about 80% on the dollar. This one was largely a success.
Then there was the issue in 2001 when the airline industry faced collapse after 9/11. Carriers faced a money crunch when a flying ban was imposed and people were afraid to fly. The government provided compensation. But once flights resumed, the airlines could not get credit. The government set up the Air Transport Stabilization Board to provide up to $10bn in loan guarantees. The government received shares in the airlines in return for guaranteeing loans to them and also charged fees for participating in the scheme. Taxpayers eventually made a profit of $300m. The weaker carriers lost out, such as United Airlines, which was forced into bankruptcy, but most of them survived. Thus, the carrier bail-out largely succeeded.
Most of the bailouts seem to work, basically 3-1 as in this scenario, but what concerns me is the frequency. If the government has to bailout companies, half of the bailouts occurring since the '80s, how vibrant can that economy be?
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