Jan 23 2009
The Banks And The Federal Bailout
I am against the bailout that the federal government made to the banks, for many reasons.
The first is this: Why should my money go to bailout an industry that had bad business practices? If I used the same practices in my life as the banks did in theirs, no one would bail me out. In fact, I would probably end up in jail for fraud. But for the banking industry, I guess the rules don’t apply.
I understand that without a bailout there would’ve been a larger impact on the economy. But that is what economies do - they go through recessions, depressions and booms. When you cycle through one, you will cycle through the others.
Here’s my second reason: The banks cannot tell you where the money went. Some banks, when asked, said the money is being spent on “general purposes” and there is “no way to track where it went.” Really? That’s what accounting is for. But I guess that banks don’t have to do real accounting with other people’s money - that is the same problem that got them into this mess.
It turns out that I am not the only person who objects to $700 billion being spent and not knowing where the money goes.
The Treasury Department’s top watchdog for the financial bailout says it’s practically impossible at the moment to tell where all the money has gone and is preparing to ask every bank and company that’s received a dollar from the $700 billion financial rescue to detail how the funds were used.
The statement is that if the taxpayer money is being used to bail them out, then the taxpayers should know where their money went. Over 300 institutions are being asked to submit a narrative outlining their “use or expected use” of bailout monies.
The FDIC has also asked the firms to state how this money is being used. Why is the FDIC interested? I think it is because they insure deposits in banks, and want to make sure the money is still there that they are insuring. The FDIC insurance policy is one reason why people still have faith in banks - even failing ones. People know their money will be there if they need it.
This is simply another indication that the federal government should get out of the bailout business. It is one thing if they provide a “secured loan” or something that will be paid back by the banks. But this was simply a free handout to the banks that our taxpayer dolloars paid for, and will continue to pay for.
In order to give out this money, the federal debt limit had to be raised. Why? Because the USA spends a lot of money -more than we bring in through taxes. Therefore, we “deficit spend.” We spend money we don’t have. This will eventually lead to a bigger economic collapse when all that money has to be repaid.
So stop the bailouts. Failing industries and companies will fail, and then we will cycle upwards. But if we continue to bailout industries and companies, no one is going to learn and they will continue doing what they are doing.
