Evidence from the performance of banks shows that in the real world betting against long shots does not pay.

True if empirical evidence on bank performance shows that strategies equivalent to selling tail risk (collecting small steady gains while being exposed to rare large losses) produced net losses or underperformance over full cycles including crises (e.g. cumulative losses from 1982 or 2008 wiping out prior profits). Mostly true if the evidence supports this for major crisis periods or large banks but not uniformly. Mixed if the evidence is ambiguous or supports it only for some periods or institutions. Mostly false if it rests on real crisis losses but generalises them to a proven finding without systematic support, or if banks were net profitable over the cycle. False if systematic evidence shows that banks' tail-risk exposure paid off overall.

Set before the research began.

1. E1 The Savings and Loan Crisis riskhub.org

   “Between 1986 and 1995, according to the FDIC, 1,043 thrifts holding about USD 519 billion of assets were closed, and the clean-up cost an estimated USD 153 billion, of which taxpayers paid roughly USD 124 billion.”

2. E2 The Savings and Loan Crisis riskhub.org

   “According to the FDIC, the industry’s net income went from a profit of USD 781 million in 1980 to losses of USD 4.6 billion in 1981 and USD 4.1 billion in 1982.”

3. E3 The U.S. Banking Debacle of the 1980s: A Lesson in Government Mismanagement Foundation for Economic Education · 1 April 1995

   “By 1994, both the banking and thrift industries were in their best financial condition since the early 1960s and were realizing record profits.”

4. E4 The U.S. Banking Debacle of the 1980s: A Lesson in Government Mismanagement Foundation for Economic Education · 1 April 1995

   “For banks, the loss to the FDIC and thus to other solvent banks was about $40 billion.”

5. E5 The U.S. Banking Debacle of the 1980s: A Lesson in Government Mismanagement Foundation for Economic Education (FEE), by George Kaufman · 1 April 1995

   “For S&Ls, the loss was near $200 billion, some $150 billion of which was beyond the resources of the FSLIC and was therefore charged to U.S. taxpayers.”

6. E6 The U.S. Banking Debacle of the 1980s: A Lesson in Government Mismanagement Foundation for Economic Education (FEE), by George Kaufman · 1 April 1995

   “By 1994, both the banking and thrift industries were in their best financial condition since the early 1960s and were realizing record profits.”

7. E7 The Savings and Loan Crisis RiskHub · 25 October 2026

   “Between 1986 and 1995, according to the FDIC, 1,043 thrifts holding about USD 519 billion of assets were closed, and the clean-up cost an estimated USD 153 billion, of which taxpayers paid roughly USD 124 billion.”

8. E8 Two Crises: A Comparison FDIC Staff Studies (Report No. 2020-02) · March 2020

   “For the banking industry, the end of the crisis of the 1980s and early 1990s was followed by a dozen years of excellent performance, with record profits reported almost every year (apart from the brief recession of 2001 to 2002).”

9. E9 Two Crises: A Comparison FDIC Staff Studies (Report No. 2020-02) · March 2020

   “when converted into 2013 dollars, losses in the earlier crisis reach about $360 billion.33 Losses during the recent crisis amount to about $68 billion in 2013 dollars.”

10. E10 FRB: 2009 Bulletin, Profits and Balance Sheet Developments at U.S. Commercial Banks in 2008 Federal Reserve Board · 6 October 2009

    “It then falls to about 9.4 percent in 2007, and to less than 1 percent at the end of 2008.”

11. E11 Do Big Bank Equityholders "Pay" for Bailout Insurance Over the Economic Cycle? Del Viva, Kasanen, Saunders and Trigeorgis (academic working paper, SSRN 3003900)

    “we find over the recent 43-year period equityholders in big banks paid fairly for TBTF bailout insurance in terms of equity returns.”

The evidence confirms large crisis losses: thrift industry losses in 1981-82 (E2), S&L clean-up costs of about $153-200 billion (E1, E5), bank losses to the FDIC of about $40 billion (E4), and a fall in a bank profitability figure to less than 1 percent at the end of 2008 (E10). However, the FDIC's own staff study reports that after the 1980s-early 1990s crisis came a dozen years of near-record profits (E8), and other sources describe record profits by 1994 (E6). An academic working paper finds that over a 43-year period equityholders in big banks paid fairly for too-big-to-fail bailout insurance in terms of equity returns (E11). The claim rests on real crisis losses but generalises them into a finding that the evidence presented does not systematically support, which fits the 'mostly false' criterion.