This is for GQ, but I’m putting it in GD. It seems a simple question, but are the bailouts to the corporations to be repaid or are they free money, and if so under what terms are they to be repaid and does the government get collateral?
None of the bail-out money is an outright gift, but there are still lots of varieties. This shit-stew has all sorts of different spices.
The auto industry got loans with strings attached, which means the government has precedence in getting its money back first if the companies still go under despite the assistance from public funds. And even if the companies go through a bankrupcy/financial restructuring, they won’t be able to stiff us. They’re intended as bridge loans to help the automakers deal with the harsh transition they need to make, but afterward, we should get that money back. This money might not be enough to save them, but at least it’s not going to end up in a Swiss vault. Fat lot of good that’ll do us, though, if the failure of one of the big players also bankrupts their entire supply chain.
The bail-out money for the banks has included a lot of loans, too, as well as the purchase of stock. This means that We The People have literally been buying up “ownership” of these big financial companies. If the banks recover in the future, these shares should become a valuable asset which we can sell in the future to get (at least some of) our money back. The downside to this is that we bought non-voting shares, which means that we can do exactly jack and shit if those hoodlum bankstas start doing acts akin to thievery, like give themselves bonuses for the good work of destroying our economy. A better plan would’ve been to take the banks into receivership (temporary nationalization, similar to what the FDIC does). There’s a growing consensus that that’s exactly what we’re going to have to do anyway, but there’s been a lot of resistance to the idea among the ignorant, the unwashed, and the last two presidential administrations.
There have also been some loan guarantees in there. This is money we haven’t paid yet. It’s just a promise that we’ll pony up the cash to buy a new paddle if one of the companies down shit creek loses theirs. I’m sure there are strings attached to this money, too, but I’m not sure what they are.
It’s complex, and some of the money has indeed been wasted. But none of it is a gift, as such.
If the company survives, it’s a loan. If it doesn’t, it’s a gift.