1) Where is the links to factual evidence - and not bank/gov't. hype - that 'pretty much all banks that would have gone down'?
You are falling for government/bank hype so they can keep 'too big to fail' going.
Lets look at the facts.
We had one major "bank" go down and it caused a total credit freeze world wide. This was the result of the sub-prime mortgage scandal (which still aint fixed btw). No lending between banks is bad, very bad. The first thing that happens is they stop lending to people in general.. and companies, and companies cant function without credit.
The next thing they do is try to figure out what is actually worth something in their portfolio, and considering the constant fall in house prices and falling stock prices (at the time) then that in it self is hard to figure out.
And then there comes the liquidity issue.. banks lend money too, and if they cant finance said lending, then they go belly up. And since banks are leveraged more than 1-1, then they dont have the liquid or non liquid assets to pay off the consumer.. aka your money in your bank account.
So if the bank goes down, then you loose your money. Now we have the FDIC, but the problem with the FDIC, is that it is not designed for many or/and major bank failures at the same time. I have heard numbers like the FDIC insures 4 trillion in deposits, but only has 53ish billion in funds. Who do you think will have to make up the difference if suddenly the 2 biggest banks go belly up?
2) You do realize that TARP had almost nothing to do with saving the banks? And that Paulson had to threaten the big banks to take the TARP money? That is a documented fact.
Yes, and that was to spark confidence in the financial system. Remember confidence in the system is key for any system to work.. regardless if it is the gold standard or not. If there is no confidence in the amount of gold backing up a currency, then that currency is worthless for example.
By forcing supposedly healthy banks with bail-out money, they stated that those banks all were backed by the government and were safe. Hence there would hopefully be no run on the banks... which there was not. Remember the banking records, who is doing good or bad, are secret.. so people knew some banks were hurting, but which ones was not known.. that is why the credit crunch happened. The banking secrecy issue also kept Lehmans and others running long after they should have been shut down... it is nice when you can hide your true nature eh?
In other words - there was no near catastrophic breakdown. A few banks went under. A few more would have followed without bailouts. But most banks were no where near collapsing. And if they were - why did they refuse TARP money, if they needed it to survive?
Again you dont get it.
A "few".. try over a hundred in 2007 alone. 200+ in 2008. But they were small banks. We are talking about the biggest banks not only in the US but the world. Bank of America for example, Citigroup and so on. BOA and Citi are not small banks..BOA had 800+ billion in deposits in the 4th quarter 2007. Had BoA gone down, which it would, then the FDIC would have to cover 800+ billion.. money it did not have.
BOA has been a problem bank, and still is... since 2007. When BOA swallowed Myrill Lynch, it added crap on top of its own crap. CITI was also hurting big time and also had near a trillion dollars in deposits. Considering these two banks alone stood for almost half the total deposits in the US, then you can see the problem if said banks went belly up. And if you did not notice last year BOA sold 73 billion dollars worth of mortgages to Fannie for 500 million dollars... any guesses what kind of assets they were?
Fool Me Twice: Bank of America Plays Hide And Seek Using Fannie Mae - Forbes
TARP was not perfect but it was needed. The banking and financial industry can not collapse as a whole period.. it would be beyond catastrophic, and in a time where confidence is next to nothing, then leveraged banks/financial institutions would easily go belly up because they cant access the credit markets.
Now the irony is, these banks were saved and are today supposedly stronger, but they are also much bigger and even more "too big to fail".. yes I would love for them to be broken up. The issue should not be demonizing TARP, but to make sure that TARP is never needed again, and that means breaking up too big to fail banks and financial institutions. This has not happened, and those banks and financial institutions are now even bigger than they were in 2007/8, which is not good. And yes Obama has failed big time on this issue, although the GOP has not exactly been pushing for changes either.