TARP and other Bank Bailouts and Bail-Ins around the World (eBook)

Financial crises are recurring phenomena that result in the financial distress of systemically important banks, making it imperative to understand how to best respond to such crises and their consequences. Two policy responses became prominent for dealing with these distressed institutions since the last Global Financial Crisis: bailouts and bail-ins. The main questions surrounding these responses touch everyone: Are bailouts or bail-ins good for the financial system and the real economy? Is it essential to save distressed financial institutions by putting taxpayer money at risk in bailouts, or is it better to use private money in bail-ins instead? Are there better options, such as first lines of defense that help prevent such distress in the first place? Can countercyclical prudential and monetary policies lessen the likelihood and severity of the financial crises that often bring about this distress? Through careful analysis, authors Berger and Roman review and critically assess the extant theoretical and empirical research on many resolution approaches and tools. Placing special emphasis on lessons learned from one of the biggest bailouts of all time, the Troubled Asset Relief Program (TARP), while also reviewing other programs and tools, TARP and Other Bank Bailouts and Bail-Ins around the World sheds light on how best to protect the financial system on Wall Street and the real economy on Main Street. - Presents a well-informed and rich account of bailouts, bail-ins, and other resolution approaches to resolve financially distressed banks. - Uses TARP as a key case study of bailouts that has been thoroughly researched. - Provides valuable research and policy guidance for dealing with future financial crises.

Allen N. Berger is H. Montague Osteen, Jr., Professor in Banking and Finance at the University of South Carolina, President of the Financial Intermediation Research Society, Senior Fellow at the Wharton Financial Institutions Center, and Fellow of the European Banking Center.He has published over 125 articles in refereed journals, including in top finance journals, Journal of Finance, Journal of Financial Economics, and top economics journals, Journal of Political Economy and American Economic Review. He is co-author of two research books and co-edited all three editions of the Oxford Handbook of Banking. He serves on nine journal editorial boards, co-edited eight special issues of research journals, and formerly edited the Journal of Money, Credit, and Banking. His research has been cited over 90,000 times, including 30 articles with over 1,000 citations each, and another 19 with over 500 citations each. He has given invited keynote addresses on five continents.

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Financial crises are recurring phenomena that result in the financial distress of systemically important banks, making it imperative to understand how to best respond to such crises and their consequences. Two policy responses became prominent for dealing with these distressed institutions since the last Global Financial Crisis: bailouts and bail-ins. The main questions surrounding these responses touch everyone: Are bailouts or bail-ins good for the financial system and the real economy? Is it essential to save distressed financial institutions by putting taxpayer money at risk in bailouts, or is it better to use private money in bail-ins instead? Are there better options, such as first lines of defense that help prevent such distress in the first place? Can countercyclical prudential and monetary policies lessen the likelihood and severity of the financial crises that often bring about this distress? Through careful analysis, authors Berger and Roman review and critically assess the extant theoretical and empirical research on many resolution approaches and tools. Placing special emphasis on lessons learned from one of the biggest bailouts of all time, the Troubled Asset Relief Program (TARP), while also reviewing other programs and tools, TARP and Other Bank Bailouts and Bail-Ins around the World sheds light on how best to protect the financial system on Wall Street and the real economy on Main Street. - Presents a well-informed and rich account of bailouts, bail-ins, and other resolution approaches to resolve financially distressed banks. - Uses TARP as a key case study of bailouts that has been thoroughly researched. - Provides valuable research and policy guidance for dealing with future financial crises.