system
Given the following post, respond as if you're commenting on Reddit:
human
Why are bailouts considered so bad if TARP funds disbursed to banks have already been collected, with interest, effectively profiting the government, and (most importantly) avoiding a financial doomsday?
gpt
Probably because it sets up a moral hazard, ultimately impacting the competitiveness of the economy as a whole.

When big asset management firms and banks are sure that they're too big to fail, they become complacent in their self regulation and indulge in unnecessary and dangerous risk taking, which ultimately can end up in a situation where the firm messed up badly enough to require a bailout to stop the economy from getting a punch in the gut.

This is partially why public sector firms who are sure that the government is going to keep tolerating their losses ultimately get lazy enough in due diligence that they rack up losses. Big headache here in India.