I don’t know what bailouts you’re talking about specifically. I’ve not looked into any covid bailouts that may have occurred. What I can answer is how bank bailouts in Sweden during the 2008 crisis worked.
The very short version: A bank can’t pay what it owes.
The bank gets an offer from the Government: issue stock and we will buy it for enough money to cover your immediate expenses. Government now owns half the bank, previous shareholders are not happy but owning the other half of the bank is better than owning nothing which is what they would have had otherwise. The government later sells it’s stock to make some of the money back.
The main criticism is that the banks took a risk and made more money, paid higher bonuses than they would have without taking the risk. When the gamble failed the tax payers took the bill. Even after selling the stock for a profit years later the side effects of the financial crisis was overall a big negative for the government.
My guess, since it sounds like something said to piss people off, is that they pay “too high” bonuses before the bailout because no one can put a number on the risk they take. The bailout money is used to save the company, the CEO may even be fired but he still have his mansion and luxury cars that he paid for by taking a risk at the tax payers expense.
I don’t know what bailouts you’re talking about specifically. I’ve not looked into any covid bailouts that may have occurred. What I can answer is how bank bailouts in Sweden during the 2008 crisis worked.
The very short version: A bank can’t pay what it owes. The bank gets an offer from the Government: issue stock and we will buy it for enough money to cover your immediate expenses. Government now owns half the bank, previous shareholders are not happy but owning the other half of the bank is better than owning nothing which is what they would have had otherwise. The government later sells it’s stock to make some of the money back.
The main criticism is that the banks took a risk and made more money, paid higher bonuses than they would have without taking the risk. When the gamble failed the tax payers took the bill. Even after selling the stock for a profit years later the side effects of the financial crisis was overall a big negative for the government.
I watched The Big Short for the Nth time, but I guess I was talking in general about the U.S.
My guess, since it sounds like something said to piss people off, is that they pay “too high” bonuses before the bailout because no one can put a number on the risk they take. The bailout money is used to save the company, the CEO may even be fired but he still have his mansion and luxury cars that he paid for by taking a risk at the tax payers expense.