The banking bailout of the subprime crisis: Was the bang worth the buck?

► Markets priced positively announcements of banks' rescue plans in the last crisis. ► However, individual institutions were reluctant to seek public assistance. ► Home banks perceived foreign rescue plan announcements as subsidies to foreign banks. ► Specific announcements fed fears in other banks of being crowded out for subsidies. ► Multiple specific announcements exacerbated banks' moral hazard.