If enough doesn't get returned, the gov/centeral bank gives it to you as a bailout. And for many loans you automatically get it from the gov if the debtor can't pay.
No, that's not how it works. They did this a few times, even a few high-profile cases, but the vast majority of times they just gave money to the struggling bank.
That money comes from the FDIC insurance fund, which comes from other banks. It's not printed or coming from taxpayers.
Anyway, a "bailout" is when you give money to equityholders. They often lose money in situations people call "bailouts" even though they're literally the opposite.
There were many forms of bailout for Citibank (and others). Some were (extremely favorably termed) loans, some government backing of their bad assets and some were buying stock that the market didn't want to touch.
May or may not be technically free money, but for sure Citibank doesn't hand out loans to bankrupt customers on such terms.
The gov could have e.g. let Citibank go bankrupt and just take it for free. Like banks do to their customers.
If the gov wouldn't have bailed out Citibank the shareholders would have been wiped out in the first place. And gov would have gotten it for essentially free if wanted. It was not like they saw that here's a great investment opportunity to make profit for taxpayers.
> If the gov wouldn't have bailed out Citibank the shareholders would have been wiped out in the first place.
And also the entire economy would have collapsed, and we'd all be trading ammunition for bottlecaps, instead of merely living through a nasty recession.
Which is why they backstopped it. Yes, it would have been cheaper to let Citi fail and nationalize it, but it wouldn't have been cheaper to then have to deal with all the contagion and all the other businesses that would have exploded because of it.
