Alternaive to the bail out.

3 Replies

I know many here vehemently opposed the financial institutions' bail out of 2008 & 2009, but here is the question. What would be the alternative? And if you say "let them all fail" what do you think the ramifications would have been if we did?

OK Eddie, I'll bite.
I'm not sure I'm completely against the financial bailout. I am against the stress tests that are set up and the fact that some huge banks had fed funds to use and other banks didn't. It creates an unlevel playing field, imo.
Same unlevel playing field in the other bailouts. GM "needed" a bailout to survive, according to govt. How has Ford competed and succeeded. How about certain insurance companies and financial companies succeeded, and yet bailouts to AIG haven't helped too much.
I use a bank in So. TX that is expanding without the handouts or govt interference. It can be done.
I think I'm against the concept of bailing out entities with tax money, without other options being explored. It just keeps pileing up and seems to be a way of allowing the entity to run a lousy operation and have a crutch to fall back on. Small companies don't have that option, nor to families have that option. I would think that some mid size banks or small banks that are run properly, invest in less risk, would be more than happier to pick up customers of larger banks.
I admit, this isn't my area of expertise. I just don't like the trend of bailouts and govt then gaining a foothold in control of that entity. Rich

Thanks Rich... One brave soul... :lol:
I agree with you on the stress test. It created an impossible situation for the banks. On one hand, the fed rolled back the monitory reserve requirements, which provides better stability, but on the other hand, it restricts the banks' ability to lend...
The AIG is a different story. It's one of those "You damned if you do and you damned if you don't" AIG exemplified the term "Too big to fail" mainly because too many pension plans were heavily invested in it.
...And of course there is Goldman Sachs. This is the one that really boils my blood since bailing out AIG also seems to be part of the plan of bailing out Goldman...( Not only too big to fail but too powerful as well...)
I'm against the concept of bail out myself as well, however in this case I don't think we had a choice.
The part that strikes me the most is the fact that the government lends the banks money at zero interest and they all turn around and charge us an arm and a leg...