Should we bail out the banks and mortgage companies or just let the government cover the insured deposits?
I say let them fail like any poorly run business would . This will allow for the proper investment dollars and management teams to operate banking on sound policy rather then hit and run tactic’s that put hundreds of millions of dollars in undeserving pockets of thieving greedy so called business men who ran these companies into the ground and reaped hundred million dollar salaries . . ….
I say hold them accountable in court and seize their assets before they can place them in offshore accounts . Take their homes and luxury cars and yachts away from them and put them behind bars for creating such a disastrous impact on our economy .
These are after all the people with an education with degrees in finance , banking , economics and they should have known better .
This was a crime and to bail it out only encourages more actions of a similar nature in the future .
My tax dollars should not go to fund any bail out period no matter how so called important it is to the nation .
I agree! S&L recollections anyone?
We all know how THAT fiasco ended!
well said.. agreed!
What you are describing is the concept of moral hazard. If the banks know they will be bailed out, they will be wiling to take risks they otherwise wouldn’t. It’s a very real problem, and I agree with you that there should be no taxpayer bailouts.
Unfortunately, they are a bit slicker then that. The central bank has been increasing the money supply to help the banks maintain the liquidity necessary to stay in business. This increases inflation, so while the government is not bailing out banks directly, we all “Pay” for it with higher inflation and a dollar that is worth less today then it was yesterday.
Companies in general, not just banks, have been clamoring for deregulation for the last 30 or so years. Now that we are at the point where there are barely any rules for finance anymore, we see what happens to the system. Regs are not in place to protect the consumer, they are there to protect the SYSTEM. De-regulation causes the system to break down.
The real issue in your question is what effect would major bank failures have on the rest of the economy. Can we afford for our 10 biggest banks to go out of business? I don’t think we can. here is my solution.
if the banks need help to stay in business for hte good of the country, then we need to do something. but it has to be structured in a way that does not allow the executives and shareholders of those same banks to profit from the bailout. Take everything you can from the shareholders, and if that isn’t enough, let the gov’t step in with as small a bailout as is necessary to maintain the American banking system. There is truth to the concept of Too Big To Fail.
Covering the insured deposits will be bad enough. I am not for rewarding a lack of accountability. Any good businessman knows better than to make loans to bad risks. Anybody with a high school education knows better than that if they ever want to see their money again. I would say these lending institutions knew exactly what they were going to do before they made their lending rules or lack there of. They bundled the loans and sold them to foreign investors. These institutions can’t even claim the foreclosed homes. What a racket and it looks like its going to backfire.
I believe anyone who authorized a unsecured loan to anyone who was unqualified to secure a loan should go to jail just like any other street corner loan shark!
Why the banking and securities firms were allowed to do this legally is a crime in itself and I, for one, am not sure that it was legal. This administration has cut the ties of any legal restraints that once held companies checked from the exercise of full speed ahead greed. I don’t think anyone anticipated these results, but I remember that Alan Greenspan said something about an over exuberant economy…and that was as tough as it got. I really think that the Securities and Exchange did a terrible job.
Thanks
I think your instincts on the ultimate responsibility burden are right on. But I don’t believe there’s any law that would aid recovery of that lost money. The overinflated prices of homes were due to consumers paying increasing prices. The approval of their mortgages for those prices – despite what their income would have supported – was the risk assumed by the lender.
That’s not exactly illegal, especially in light of recent deregulation. What CAN you put these financial services industry execs in prison for, exactly? Repackaging debt holdings? As long as they disclosed the nature of mortgage backed securities, their responsibility was covered. Taking deposits and investing them in MBS’ to begin with? That’s not illegal or actionable either.
Waste and mismanagement? I suppose you could argue that for every downturn. Sure, this current downturn was predicted over and over and over again. The problem is, though, that CONSUMERS didn’t believe it. They thought housing would never go down, so as a result for a long time, it didn’t. So you really can’t argue waste and mismanagement for continuing to stay in a sector that WAS growing.
Financial services people are permitted to be bad at their jobs.
Consumer education would have averted this crisis far better than government intervention or fear of state retribution would.
But now that it’s done, should you and I pay for it with our uninsured deposit portions? Do we pull our deposits out now? Where do we go instead? Do we now lose value going overseas because of a devalued dollar, exchange fees and penalties due by contract to our original depositors and our original government tax shelter?
We, who didn’t participate in the consumer foolishness will get slammed anyway if someone doesn’t buy off the lenders.