Not a financier myself, but there is a concept of financial risk management.
The idea is that a bank lending out any money at all exposes itself to the risk of not being able to pay back all depositors if they should all come wanting their money back at the same time. But that (almost) never happens. So, in practice, there are established rules that govern how a bank can make use of various financial instruments (like loans) and stay within acceptable risk guidelines.
The problem we’re seeing with the bailout today is not simply that banks loaned out more money than they could handle… but that government regulations forced them to do it to avoid penalties. The free market was maneuvered into this untenable position. And it was known years ago that this would be the result.
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Skip the last 60 seconds at the very end if you don’t want the partisan sales pitch: video.