This prediction market addresses whether a major U.S. bank, defined as one with total assets exceeding $50 billion, will receive a federal government bailout before the end of 2026. A bailout is specifically defined as the establishment of a Federal Reserve emergency lending facility or other direct government intervention in response to solvency, liquidity, or capital adequacy concerns. The question emerges against a backdrop of persistent economic uncertainty, elevated interest rates, and ongoing scrutiny of the banking sector's health following the regional banking crisis of 2023. The market's resolution date of December 31, 2026, creates a defined timeline for assessing regulatory and economic pressures on systemically important financial institutions. Interest in this topic stems from its profound implications for financial stability, taxpayer liability, and the political economy of banking regulation. Market participants, policymakers, and the public are monitoring asset quality, commercial real estate exposures, and the potential for contagion that could necessitate extraordinary government support.

Historical Context

The modern framework for U.S. bank bailouts was largely shaped by the 2008 Global Financial Crisis. In response to the collapse of Lehman Brothers in September 2008, Congress passed the Emergency Economic Stabilization Act, which created the $700 billion Troubled Asset Relief Program (TARP). TARP included the Capital Purchase Program, which injected funds into hundreds of banks, including major institutions like Citigroup and Bank of America, to stabilize the financial system. This era also saw the controversial bailout of insurance giant AIG and the creation of temporary, broad-based emergency facilities by the Federal Reserve. The political backlash to these interventions led to the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, which aimed to limit future bailouts by establishing orderly liquidation authority and requiring living wills for large banks. However, the regional banking crisis of March 2023, which saw the failures of Silicon Valley Bank, Signature Bank, and First Republic Bank, tested these post-2008 reforms. Regulators invoked systemic risk exceptions to protect all depositors, and the Fed established a new emergency lending facility, the Bank Term Funding Program, demonstrating that the government's bailout toolkit remains active.

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