"What would define a 'bailout' as then?"

It's to "help" someone in a "predicament". The context is that the someone is in trouble and to need the help is pejorative.

But with this definition, TARP was not a 'bailout'.

Help? The "help" is usually much like a gift and not likely to be paid back. The banks had to pay HIGH interest, and did. The US Treasury made out like vulture capital. In the end it was the banks, and their stockholders, who gave 'help' to the US Treasury and the US taxpayers.

Need? At least Goldman Sachs didn't need the money in any sense.

In most respects, the banks didn't really need the money; that's why they were able to pay back the money quickly with interest.

Any need there was was due just to the liquidity issue.

The main reason Paulson acted was to stop international runs on banks and, thus, save the world from something that stood to be worse than the financial collapse that caused the Great Depression.

Pejorative? Whatever the banks did wrong in blowing the housing bubble, the TARP effort was short term and not really the fault of the banks but caused by the Bear Stearns and Lehman problems and, thus, the FEAR (the seed of a bank run -- remember FDR) in the world that might have led to a run.

Recall also the 1987 stock market crash: Greenspan was at a big meeting, left, went to a phone, got the news, called the major NYC banks and told them "The window at the Fed is open". Greenspan was going to provide liquidity and avoid a liquidity problem that could have done serious damage.

My little example on the meaning of a liquidity problem was pitched at the grade school level. You SHOULD be able to understand it. Your reactions are way, WAY off base. If you don't like the ratio of $600 and $10 million, then assume $1 million and $10 million.

Or improve the example to be a college student who just inherited an office building worth $10 million but needs $600 for a DUI case. He's not broke, but he does have a liquidity problem. He can get the $600 but not in just a few minutes to get out of jail.

In finance, 'liquidity' is a crucial topic; you should quit straining to misunderstand it.

If you want a real example, then when my wife died, I faced $6000 in funeral expenses. I didn't have the $6000 in my checking account. But within the next month, I sold some stock, raised the $6000, and paid the bill. So I had a 'liquidity' problem. I could have borrowed money using the stock as collateral. Such a loan would not have been a 'bailout', or 'help' and nothing pejorative.

You seem to have missed the recent story [1] from Bloomberg that the Fed made 7.7 TRILLION dollars--10x TARP, and half of the US GDP--available to banks at 0.01 interest. They used that money to buy Treasuries--ie, loaned the money back to the government at interest, earning an estimated $13 billion in profit.

So yes, they were able to pay back TARP pretty easily.

[1] http://www.bloomberg.com/news/2011-11-28/secret-fed-loans-un...

Yes, the Fed did 'quantitative easing' which is obscure nonsense for they printed some money and gave it to the banks. The bank stockholders should thank the Fed. Actually the taxpayers should own the banks and slowly sell them back to private investors as the economy recovers.

When Greenspan did such money printing, he called it "rebuilding the balance sheets".

A 'secret' is that the large banks are creatures of the Fed. They just are.

Yes, it might be more fair to the taxpayers, who really gave the money to the banks, and who are BACKING the banks, to have the banks be so tightly regulated that they are "boring" with little chance of going bust or of putting people in the "1%". So, for the risky stuff, let hedge funds like MF Global, LTCM, etc. do that. And break up the big banks so that if one fails it won't bring down the whole economy. But these changes are too hot politically.

I doubt that the Fed's quantitative easing was the main reason those nine banks were able to pay back TARP. Again, TARP was just some fast money to stop runs on the banks and, as your data suggests, a relatively small amount of money.

So, why did the Fed print money and give it to the banks? Because otherwise we would have no financial system and, then, no economy and then hunger, revolution, war, massive death, etc., little things like that.

So, what happened to the money the banks were supposed to have, that is, the money the Fed replaced? It disappeared! Uh, actually with 'fractional reserve banking' the banks can essentially 'create money'. Or you borrow $100 from a bank and deposit the loan in your checking account. Then the bank loans out $90 which is deposited in a checking account. Then they loan out $81 which is deposited in a checking account. It's called the 'multiplier effect'. So, that's mostly the same $100 loaned out 3+ times.

It may be that the bank only has about $10 of the stockholders' money and the rest is from depositors via checking accounts ('demand deposits'). So, the bank has maybe $10 but about $300 loaned out.

Loaning money this way on 'financial assets', e.g., to buy stocks, especially on thin margin, that is, with high leverage, can blow an asset bubble -- 1929. So we passed some laws keeping banks from loaning money for such purposes and put in place some higher margin requirements. Then the sneaky bankers discovered houses, Fannie, Freddie, the CRA, adjustable rate mortgages, the Countrywide business model, and 'social justice' and blew a bubble based on housing instead of stocks.

When the stock market bubble burst in 1929, we got The Great Depression. When the housing bubble burst in 2008, we got The Great Recession. See a pattern here?

Now if the economy gets sick from, say, a popped bubble, then some of that $300 in loans won't get paid back. If as much as $10 of that $300 doesn't come back, then the bank is bust. In simple terms, that's what happened in the housing bubble, both its growth and its shrinkage.

So, when the bubble burst, some of that $300 or so the bank created is destroyed.

So, we can try to continue on with that money destroyed, but that would cause deflation. In a credit economy, deflation is a bummer because the easy way to make money is just not to spend it and just to put it under a mattress. So the economy goes into the tank and just stays there as people get poor, sick, cold, and dead. We can get wars that way. At least we can get people 'occupying' city parks.

So, the Fed is trying to avoid deflation. But the economy is very sick, and even with interest rates near 0.00% per year the economy is plenty sick. Why? We don't get good answers from the newsies, not even Bloomberg, but first cut businesses don't want to borrow for inventory, expansion, etc. because the customers aren't coming, and the banks don't want to lend because the businesses are sick and might not pay back. Or, the Fed's money has the banks flush again, but that money is not yet in the hands of small businesses and consumers.

Maybe a better solution would have been Milton Friedman's Helicopter: Print up some money, about what was destroyed, load it into a helicopter, fly across the US, scatter it, and let people pick it up and spend it. This is not entirely a joke.

There is a great title for a magazine and maybe a Web site -- Secret Romantic Confessions. It's TOO tempting not to look! Well, Bloomberg is a newsie site so has Fed "secrets", 'secret money given away'. BS. Total, 100%, reeking, fuming, bubbling, sticky BS. Grab'm by the heart, gut, and below the belt nonsense BS and collect the ad revenue. Net, Bloomberg is spouting nonsense to get yahoos up on their hind legs. Deliberate, deceptive, destructive nonsense. Of COURSE the Fed gave money to the banks: That's EXACTLY what 'quantitative easing' meant to anyone but a total yahoo, idiot, fool. There was no 'secret' involved!

It was just such nonsense from yahoos that was largely responsible for killing about 100 million people from the crash in 1929 to the end of WWII in 1945. How? Because when the US stock market bubble burst in 1929, a LOT of money the banks had created by loaning money to buy stocks on thin margin was destroyed. Remember "The Roaring 20's?" -- lots of parties from lots of money created by bank lending.

So, when the bubble burst, we had no banking system. Even out in Kansas, depositors lost 100%. We were back to a barter economy. We had massive deflation:

"For Sale. Nearly new car. Lost all in stock market. No offer too low."

"Deflation is the easiest thing in the world to fix: Just print money.". But we didn't. Various yahoos didn't understand we needed to PRINT MONEY. However even Betty Boop understood. Still we didn't.

So we went from 1929 to 1941 refusing to print money as needed. Unemployment was a disaster. Some of the problems in loss of US 'social capital' are STILL with us. Dumb. Really dumb.

Since the US was not buying, foreign developed economies were not selling to us. Since part of their economy was not selling, that part was not buying, and other sellers in that economy were not selling. Nearly no one was either buying or selling. The economy shut down. People were cold and hungry. So, the sickness of the US economy spread around the developed world.

Then along comes a wacko house painter with a solution: "Ein Folk. Ein Reich. Ein Führer". He gets dictatorial powers over the economy for four years. With those powers, actually he puts people back to work, building roads, bridges, ships, guns, tanks, etc. Yes, he abolishes the labor unions. Then he gets four more years of dictatorial powers and decides that he wants some new 'living space', say, to the east to a line from, say, Stalingrad to Moscow to Leningrad or, really, just to the Urals. For the people there, kill a lot of them right away (as 'inferior breeds') and kill the rest slowly as slaves on 1000 calories a day. What he did resulted in 50 million, maybe 100 million, people dead.

Then in 1941 or so people started shooting at us.

Then we got serious, and in about three months we had about three jobs for everyone who could work and were OUT of the Great Depression. Why? We printed enough money to start to replace what was destroyed in the 1929 market crash.

For now? We can be back to work anytime we want within about three months -- JUST PRINT MONEY. That's what the Fed is trying to do, but apparently Friedman's Helicopter would be more effective.

There's more, but I know; I know: This is post is already too long for a trivial little subject like putting 25 million people back to work. But, gotta tell you: Don't look for anything real on this subject from the newsies.

But, if another 100 million people die, or a billion or few, then the newsies will be right there reporting on the pains, the passion, pathos, and poignancy, with poetry, about the human suffering. They won't have even as much as a weak little hollow hint of a tiny clue about what caused the problem or how to fix it, but they can report what it 'feels' like.

That post is a pearl. Thanks.