Reply #44: See, that's my only hang-up as well.

[Selatius]

In a normal situation, when a person goes to a bank for a loan, the person puts up collateral, something he owns. If the person defaults, the bank seizes the collateral and can auction it to recoup the losses. Usually, there is still an amount owed even after the auction. Some banks choose to continue to require the person to pay the difference, while others will simply write it off as a loss.

If GM, Ford, or Chrysler were three people, very few banks would even think about giving them a loan. They would be allowed to fail. Unfortunately, if you employed a million people and your firm failed, a million people would be laid off. A city like Detroit and surrounding cities would be devastated.