There was no FDIC back in the 20s that’s why there were runs on banks as people were afraid of losing their money.
I’m talking about nationalization of the banks like Northern Rock in Britain where the shareholders get wiped out and the government take over the bank then resells it later.
So you want to penalize the stockholders and bondholders because people/entities with accounts within the banks decided to withdraw their money reducing the banks capitalization for existing loans? Or because banks were being hit by naked short attacks? Because an external event temporarily reduced the value of types of assets that were on the books?
The banks with no chance of recovering from these issues are gone. Many of the banks that got TARP money still had positive book value though they were at risk from a Capitalization Ratio issue. They have paid back their TARP money with additional interest. The Fed made money off of lending TARP money to JP Morgan, Wells Fargo, Citigroup, Bank of America just to name a few.
