In the midst of the recent $300 Billion bailout of Citi Corp, I really started to wonder why the government would possibly bail out these institutions who had made so many obviously poor decisions. Here’s what I came up with. The government backs depositor accounts through the FDIC. My guess is that the FDIC realized it couldn’t possibly make good on the depositor accounts if the major banks fell, and decided that a bailout would cost less, have a good chance of working, they could afford it, and they could save face by not telling the public that their assets were not really safe. That knowledge would lead to mass hysteria.