Feb 03 2009
Why did we bail out the banks?
So AJ got tired (poor guy is working hard at his day job) waiting for me to get the blog back up. However, I’m getting more pissed off as each day passes by… did you all see this?
Despite a near collapse that required $45 billion in federal taxpayer bailout funds, Bank of America sponsored a five day carnival-like affair just outside the Super Bowl stadium this past week
I’m just a dumb geek, tax paying, mother of four, small business owner… but can someone please explain why we gave them a dime????
Please someone tell me why helping China with my tax dollars is helpful to the US Economy?
As an ongoing Money Morning investigation has demonstrated, billions in U.S. bank rescue funds are financing buyouts worldwide – instead of lending at home. Some of those buyouts deals are being done in markets as far away as China.
Even worse, they don’t know where it’s going, or just won’t kiss and tell?
But after receiving billions in aid from U.S. taxpayers, the nation’s largest banks say they can’t track exactly how they’re spending the money or they simply refuse to discuss it.”We’ve lent some of it. We’ve not lent some of it. We’ve not given any accounting of, ‘Here’s how we’re doing it,'” said Thomas Kelly, a spokesman for JPMorgan Chase, which received $25 billion in emergency bailout money. “We have not disclosed that to the public. We’re declining to.”
Ok AJ, the blog is back up… go get um tiger!
The only good thing about the bank money is that it was in fact a loan and will need to be paid back to the Treasury with interest. That was my understanding. Does any one know something else? The new $900 billion will also need to be paid pack, only tax payers will be responsible through higher taxes for most people, for the rest of my life time and probably my children’s. Obama also has 2 more legs to the stool that we have not heard the cost yet, the cost will come in the next few weeks after the $900 billion is passed. For goodness sake, are we allowed to know where we are heading. I guess Obama is afraid to tell us what he has in mind we might rise up and say no. We are just lambs sweetly going to slaughter, I really dislike his style. If I am responsible I want to know up front my responsibilities.
I am sorry, but I think it was important to keep the banks intact. Maybe there are people out there who think that Bush was just throwing money around for the hell of it, but if the US government had just sat back and let the banks collapse this economic downturn would have been much much worse.
I think the plan Obama has now is too much money in the wrong places for the wrong thing, but when we see financial markets all over the world tanking and when everyday businesses started having difficulty getting needed funding for operations…something had to be done.
For instance I saw an interesting piece over at Just one Minute about the whole $20 billion going to executives thing that Obama was carrying on about. It turns out that the actual amount of money going to executives whose banks got TARP funds was $2.6 million, not $20 billion. The latter number was money given to all executives both foreign and domestic who do business in New York. In other words Obama is trying to do the populist thing in the hopes that people will think he is looking out for them.
At any rate, I don’t think the government is a bottomless pit or anything like that, but I also don’t think a lot of people have any idea how close our financial system came to locking up and exactly what that would have meant.
And something else to consider: if the US government had not allowed Fannie Mae and Freddie Mac to buy up bad loans for years a lot of these banks would not have been in this shape in the first place. Government helped create the situation, it has an obligation to deal with it.
One of the reasons some of that money might end up overseas is that the toxic securities ended up overeseas in their banks, and those banks lend money to the US.
The banks in the UK are in worse shape than the banks here even and the Europeans had to bail out their largest banks as well. Small countries like Bulgaria and Iceland did not have those kinds of resources and now they are facing riots. In Iceland a left of center party is taking over the government and is talking about taking Iceland out of NATO. This is not a domestic problem alone, it is global.
I also don’t think a lot of people have any idea how close our financial system came to locking up
How close did we come? I don’t think we’ll ever know.
And given that a number of banks took their bailout and banked it away or bought out their competitors – instead of lending it out – I’m going to say that we where not that close to “locking up”.
So, another trillion dollars in debt, and not a damn thing to show for it. And now Obama wants to borrow another 800+ billion for pork. That’s just great.
Wanna see a lock up? wait till we can’t sell treasury bonds on the open market, and China starts asking for its money back, and OPEC switches to the Euro.
LJ
In all fairness those events at the SuperBowl were booked and paid for months ago before the bailout.
You don’t just waltz in the door and set those things up over night.
IRA:
I am not saying that I support Obama’s bailout, I don’t. But that does not mean we throw the baby out with the bath water and just let the banks collapse. If there are people taking advantage, you deal with it. People do take advantage, of everything from FEMA to social security to government contracts. You do not shut down FEMA or social security because of it.
The DOW lost about 6.9 trillion dollars this year. Banks lost a lot more than they got. I doubt if economies all over the world staged some pretend meltdown complete with the loss of trillions of dollars just so they could get some bailout that does not begin to cover those losses.
How close did we come? Some people say hours, some say days…but no one who actually knows the markets thinks it was all some kind of trick. That is a lot like the Truthers who say Bush brought down the WTC just so he could go to Iraq.
And by the way IRA, the EU is putting more money into their financial system than we are. They are nationalizing more banks as well.
The money that Obama is talking about spending is entirely different from the money spent months ago to keep the banking industry liquid. I do not support this stimulus plan of Obama’s. I would support tax cuts, or some kind of program that had an immediate effect, but not something like this. Do not assume the two are the same.
When you know if you fail, they just ship you money, why not.
tarpon:
If they fail, you can not cash your paycheck. If they fail, businesses can not get money to operate.
The only countries that did not respond to the crisis by putting money into their countries’ financial sectors were the ones who lacked the resources.
I agree with Terrye and I believe we came within hours of imploding. How can anyone say the bank bailout was a scheme? So many of the banks failed. Several large ones. All the fault of the democrats with CRA and Clinton tinkering with requirements for loans. And guess what, the dems are still not requiring credit or jobs for loans. Nothing has changed. The dems still want the banks to lend to people who can’t pay their mortgages. Now they are talking about reducing the principal of these loans. Gosh, where was I when all this was going on? I have never in my life had my mortgage principal reduced except through payments. Redistribution of wealth, anyone? I never heard of CRA until Fannie Mae and Freddit Mac collapsed. Our wonderful media reported zilch about it like they fail to report so many democratic freebies so the regular man on the street ie republicans never knows about them.
This pile they want to pass now will do nothing to cure the economy. These are all items on the dems’ wish list for years. One of them funding Obama’s own private army of ACORN community organizers and another 50 million for Endowment of the Arts. How will that create jobs? And the dems and Obama just can’t let go of global warming and embriyo stem cell research. The former to collapse capitalism and the latter to shore up abortion which is Obama’s pet issue.