How The Fed's Generosity Made $13 Billion For America's Biggest Banks - Matt Yglesias

http://www.slate.com/blogs/moneybox/2011/11/28/how_the_fed_s_generosity_made_13_billion_for_america_s_biggest_banks.html

THE BOTTOM LINE -- Bolstering the status quo: The government didn't actually lose any money on these deals. There was no loss of funds or transfer of real economic resources. But as Bloomberg writes "details suggest taxpayers paid a price beyond dollars as the secret funding helped preserve a broken status quo and enabled the biggest banks to grow even bigger." Capitalism is supposed to have an evolutionary dynamic. Firms with sound business strategies survive and expand. Firms with unsound business strategies shrink and go bust. Consequently, over time the average quality of business strategies is improving. This evolution toward better firms over time is one of the key pillars of our prosperity. If ill-managed firms nonetheless survive, the system is broken in a fundamental way.