Wall Street: The Opposite of Venture Capital

Before you go, we thought you'd like these...
Before you go close icon

Make a bad investment, and you'll lose. That's a backbone of capitalism. It's how venture capital works.

But on Wall Street, as we've seen, things can work differently. Student loan debt can be nearly impossible to write off in bankruptcy. Certain types of debt were guaranteed by the government during the financial crisis. And of course, there are direct bailouts. Shareholders of too-big-to-fail stars Citigroup and Bank of America lost most of their money, but the direct subsidy to shareholders has totaled well into the billions of dollars.

I recently sat down with Hoover Institute economist Russ Roberts, who talked about how subsidizing risk distorts the economy. Have a look.


Bank of America's stock doubled in 2012. Is there more yet to come? With significant challenges still ahead, it's critical to have a solid understanding of this megabank before adding it to your portfolio. In The Motley Fool's premium research report on B of A, analysts Anand Chokkavelu, CFA, and Matt Koppenheffer, Financials bureau chief, lift the veil on the bank's operations, including detailing three reasons to buy and three reasons to sell. Click here now to claim your copy.

The article Wall Street: The Opposite of Venture Capital originally appeared on Fool.com.

Morgan Housel has no position in any stocks mentioned. The Motley Fool owns shares of Bank of America and Citigroup. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners