Don't forget the government bailout that saved several large corporations, and allowed them to stay in business............... (a related post) .... Then, we, the tax payer are left holding the bag while the major financial organizations were bailed out, and the CEO's given large bonuses
I suppose you are mostly referring to the auto sector and some of the financial institutions.
The usual narrative is that the lenders caused the subprime debacle, but they didn't do it all on their own. Both the borrowers and the govt itself bear a huge share of the blame, and it all began with CRA, the Community Re-investment Act of 1977. (I have edited the following slightly, but only to remove politics from it.)
"Under (that year's) Housing and Urban Development (HUD) secretary, Community Reinvestment Act regulators gave banks higher ratings for home loans made in 'credit-deprived' areas. Banks were effectively rewarded for throwing out sound underwriting standards and writing loans to those who were at high risk of defaulting. In addition, as part of the push to issue home loans to lower income borrowers, Fannie Mae and Freddie Mac made a common practice to virtually end credit documentation, low credit scores were disregarded, and income and job history was also thrown aside. "
The above, is the bugaboo that took down Leman Bros in Sept of '08, Bear Stearns 6 months earlier, (that fall began the long chain of events) put GM on the ropes because they could no longer find $$ to borrow, nearly took down AIG, forced Fannie Mae and Freddie Mac into chapter 11) and did take down many many banks.
I was not and am not happy with the way the GM bailout went. I will never again buy a GM product. The cash for stock plan was not orchestrated by the govt as so many believe. "In the popular version of the company's turnaround story, as GM teetered toward liquidation in 2009, an Obama-appointed SWAT team, led by financier Steven Rattner, swept in and hatched a radical plan: Through a novel use of the bankruptcy code they would save the company by segregating and spinning out its valuable assets, while Washington furnished billions in taxpayer funds to make sure the company was viable."
It was actually put together at GM in the last weeks of '08 and first months of '09 by a guy named Jay Alex. The new administration accepted it and publicly fronted it as their own. Such, is how our govt works nowadays.
I do understand the neccessity of saving the auto industry, specifically GM. Their logistics train is extremely long and their falling would have taken out hundreds of companies that also provided parts for just about everything we use today. A bearing is a bearing, a wire harness is a wire harness..the same companies that provided those things to GM also provided them for household appliances, farm equipment, aircraft and just about everything else.
What I didn't/don't like about the GM bailout was the fact that both GM and the govt proudly exclaimed that GM paid back their loan in full with interest. Simply not true. Bankruptcy was filed June 1 2009, with GM being turned into two separate companies. Old GM with all the company's liabilities and debt, and New GM with a butt load of taxpayer $$ and debt backed by the stock.. newly created thru the stock-for-cash deal with the Govt, specifically Federal Reserve and US Treasury. But, GM had already received $13.4 billion thru TARP in the last days of 2008, and early in 2009. All debts/liabilities that existed prior to June 1, '09 went with Old GM in the bankruptcy, including that $13.4 billion. It was not part of the stock-for-cash swap. Both the Car Czar Steve Rattner and Larry Summers ( director of the National Economic Council 'January 09-Dec '10) stated the taxpayer would never see a dime of that $13.4B come back.
(There was a total of $17.4 billion authorized----Chrysler got the other $4B. They had to pay theirs back)
New GM came out smelling like a rose, decades of stockholders in Old Gm got hosed, and the taxpayer got skewered to the tune of $13.4 billion.